Celsius Network and Core Scientific: A Troubling Partnership Comes to a Halt

The Shutdown Saga Begins

In a twist worthy of a Hollywood script, Celsius Network is waving goodbye to over 37,000 Bitcoin mining rigs hosted by Core Scientific. This decision was made during the ongoing bankruptcy proceedings of the Celsius pack. Who knew digital currencies could lead to such a drama?

The Legal Showdown

On January 3, Core Scientific filed a revised proposal, one that had just the right revisions to please Celsius. The order decreed that all mining rigs would be powered down immediately, leaving no room for a dramatic reboot during the transition phase. Talk about an abrupt end!

Power Play – The Unpaid Bills

The plot thickens—Core Scientific, in a previous court interaction, claimed Celsius was lackadaisical with their power bills. This financial negligence evidently played a hefty role in the liquidity issues that led to Core Scientific filing for Chapter 11 bankruptcy last December. It’s like watching a soap opera where the plot twist involves electricity bills!

Financial Fallout

What’s next in this financial fiasco? According to court filings, the termination of their agreement means Core Scientific can start raking in about $2 million each month from the mining space currently occupied by the Celsius rigs. Imagine making money just by switching off the lights!

The Ripple Effect on Bitcoin Miners

To add insult to injury, the conditions of their contract allowed Core Scientific to transfer some huge power costs to Celsius—costs that ballooned especially after the Russian invasion of Ukraine. Core Scientific claims this unpaid debt topped nearly $7.8 million, making it pretty clear that hosting mining rigs minus payment could lead one to financial ruin.

Market Impact: The Price of Doing Business

As the price of Bitcoin continued to dip in 2022, the financial strain on miners escalated. The operational costs soared, and reports show that the hash price—essentially how much miners earn per unit of work—plummeted over 75%. With such soaring expenses and declining profits, many Bitcoin miners find themselves grappling with debt and a dip in share prices.

The Bottom Line

Core Scientific saw a staggering 99.15% drop in share value, while others like Iris Energy and Riot Blockchain experienced similar declines of over 90%. It’s safe to say that the Bitcoin mining industry had a rocky road in 2022, one filled with speed bumps, potholes, and the occasional flat tire.