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Core Scientific moves to reject contracts with Celsius Mining
Chicago, Dec. 29 – Core Scientific, Inc. entered an emergency motion to reject executory contracts with Celsius Mining, LLC (Celsius Network LLC), according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas.
As background, in addition to operating their own digital asset mining machines, Core Scientific regularly provides hosting services for third parties’ digital asset mining machines.
Core Scientific has had such a contract with Celsius since 2020.
Currently, Core Scientific is hosting 37,536 of Celsius’ mining machines at Core Scientific’s facilities.
The machines require industrial-scale power delivery and cooling systems.
With increased power costs, Core Scientific, per its hosting agreements, started to pass on increased power costs during the second quarter of 2022 to its customers, including Celsius.
Celsius, which filed for bankruptcy on July 13, 2022, claims it is not responsible for paying increased power costs and has refused to pay all power pass-through costs the have been invoiced.
Covering Celsius’ increased power costs has cost Core Scientific $7.8 million to date.
Core Scientific does not plan on covering these costs anymore.
Additionally, because demand exceeds hosting space, Core Scientific can release the machines to another customer who is willing to pay a higher hosting rate and any power cost increases. This would generate an estimated $2 million in incremental revenue per month. Alternatively, Core Scientific could use the machines for its own mining for the same estimated $2 million in incremental revenue for month.
A hearing on the matter, to reject the contracts, will be held on Jan. 3.
Core Scientific is an Austin, Tex.-based bitcoin mining company. The company filed bankruptcy on Dec. 21 under Chapter 11 case number 22-90341.
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