Core Scientific to shut down 37,000 mining rigs it hosted for Celsius effective Jan. 3. 
The two bankrupt firms have been in a legal battle for breach of contract since October 2022. 

Core Scientific, one of the biggest publicly traded cryptocurrency mining companies in the United States, is shutting down a large number of mining rigs as it undergoes bankruptcy proceedings.

According to a court filing, the blockchain infrastructure company will shut off more than 37,000 mining rigs. The rigs are those it was hosting for the now-bankrupt crypto lending platform Celsius Network.

Core Scientific stated back in October that Celsius’ non-payment of its power bill was causing it major liquidity issues. At the time, Core Scientific claimed that it was losing approximately $53,000 per day to cover the increased electricity tariffs that Celsius refused to pay.

The latest filing comes after Core Scientific’s Dec. 28 motion seeking approval to reject Celsius’ contract was approved. In the motion, Core claimed that Celsius’ failure to pay its power bills constituted a material breach of contract. It also added that covering Celsius’ mining rigs’ power fee had cost it almost $7.8 million.

The latest filing reveals that the termination of Core Scientific’s contract with Celsius will help the miner generate more revenue. It estimates that it can earn up to $2 million per month from the space currently occupied by Celsius’ mining rigs.

Court has granted Core Scientific approval to power down all Celsius’ mining rigs effective Jan. 3, 2023. It also stipulates a 75-day period from the date in which Celsius’ is to pick up its mining equipment. And a 30-day period from the date of the order in which Celsius can file any claims relating to damages.

Crypto winter eating into miners’ revenues.

Core Scientific’s financial troubles are not only tied to Celsius’ Terra-implosion-related bankruptcy according to a Reuters report. The crypto miner stated in its Dec. 21, 2022 bankruptcy filing that rising energy costs and the crypto market winter also played roles in its financial constraint.

Core Scientific has also seen the price of its shares plunge 99.28 percent in the last year. It currently trades around $0.074, down from over $10 traded a year ago.

However, it intends to continue operating while it reaches deals with its investors. Investment bank BlackRock, Core Scientific’s largest shareholder, has already shown confidence in the firm’s plans. According to an SEC filing, BlackRock has given Core Scientific a new $17 million loan.

Remarkably, 2022 saw the price of Bitcoin (BTC) plunge from about $45,000 to its current price range of around $16,000. The Russia-Ukraine war also caused energy prices to rise rapidly.

The market conditions have also affected the revenues of other mining firms. Similar to Core, Iris Energy and Riot Blockchain saw their share prices fall 91.79 percent and 85.09 percent respectively in the last year. Riot said in a recent statement that it had failed to reach its BTC mining target despite expanding its hashrate.

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Filed under: Bitcoin - @ January 4, 2023 12:27 pm