According to Core Scientific, cancelling the agreement with Celsius will generate $2 million in revenue per month as long as Bitcoin remains around $16,700.
Celsius Network, a bankrupt cryptocurrency lender, has agreed to allow Bitcoin miner Core Scientific to shut down more than 37,000 mining rigs it had been hosting for Celsius during the miner’s bankruptcy proceedings.
On January 3, Core Scientific filed a revised proposed order that included “revisions acceptable to Celsius” and stated that “all Celsius rigs will be powered down effective January 3, 2023 and will not be restarted during the transition period.”
Core Scientific accused Celsius of failing to pay its power bills on Oct. 19, citing the non-payment as a major factor in the Bitcoin miner filing for Chapter 11 bankruptcy on Dec. 21.
Core Scientific filed a motion on December 28 seeking approval to reject Celsius’ contracts, claiming that the company’s failure to pay its power bills constituted a material breach of contract.
The termination of the agreement, according to the court filings, would apparently allow Core Scientific to generate $2 million per month from the space currently occupied by Celsius’ mining rigs.
The terms of the hosting agreement allowed Core Scientific to pass on some of the power costs to Celsius, and those costs have risen significantly since Russia’s invasion of Ukraine.
According to the rejection motion, Core Scientific spent nearly $7.8 million on covering the increased power fees as of Dec. 28, and the miner stated that it “cannot afford to continue shouldering the burden of Celsius’ unpaid power costs.”
The cost of production for miners has increased while the price of Bitcoin has decreased, eroding miners’ profits and contributing to the “hash price” — the revenue Bitcoin miners can earn per unit of hash rate — falling by more than 75% by 2022.
Many Bitcoin miners struggled toward the end of 2022 due to a lack of profitability combined with the costs associated with expansion efforts, and share prices plummeted as a result.
Core Scientific’s share price has dropped 99.15% this year, while Iris Energy and Riot Blockchain have dropped 91.79% and 85.09%, respectively.
