Core Scientific Shuts Celsius Mining Rigs
IT and blockchain solutions firm Core Scientific has shut down 37,000 crypto mining rigs it had hosted for Celsius, a cryptocurrency lender. The two companies came to this mutual agreement because Celsius had gone bankrupt, and it could no longer afford the massive mining rig farm.
Core Scientific first brought up this complaint in October when it claimed that Celsius had not been keeping up with its due bill payments. The IT firm still managed to hold on to its initial hosting contract for a further two-month period, but eventually filed a motion to cancel the contract between the two companies on 28 December.
According to the information brought up in the court, holding on to the contract was neglecting Core Scientific of about $2 million per month in potential revenue.
Furthermore, Core Scientific claimed to have covered around $7 million in bills left unpaid by Celsius, but it couldn't "shoulder the burden of Celsius’ unpaid costs” anymore. The rising energy costs due to the ongoing Russia-Ukraine crisis also played a role in Core Scientific’s decision.
Finally, the mining rigs, all 37,000 of them, were shut down on 3 January, 2023, with no plans of restarting them any time soon.
But why hasn’t Celsius been able to pay its bills?
A few months ago, Celsius filed for bankruptcy; hence, it couldn't afford to pay for the 37,000 mining rigs. The main reason behind the firm's bankruptcy was the downfall of the crypto market itself, as it was tightly correlated with Celsius' business model.
When your main course of business relies on lending cryptocurrency to others on highly lenient loan terms, you’re bound to get hit hard if the value of those cryptocurrencies plummets. That’s exactly what happened to Celsius. With the crypto market crash in 2022, along with the entire Terra Luna debacle, it would’ve taken a miracle for Celsius to have survived.
A bad year for miners!
2022 served as a horrendous year for the crypto industry, especially for miners. Along with the market crash of major cryptocurrencies, the Russia-Ukraine crisis has also led to increased power costs. Both of these reasons combined have led many crypto miners to lose significant value in their share price.
Author: Osama Shahid
Osama Shahid is an experienced writer and editor, mainly writing about gaming and crypto. In his free time, he loves to game, playing FIFA 23 and Rocket League.