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Bankrupt cryptocurrency lender Celsius Network has agreed to let bitcoin (BTC) miner Core Scientific shut down more than 37,000 mining rigs it hosted for Celsius while the miners file for bankruptcy.
Core Scientific filed a proposed revised order on January 3 which incorporated revisions acceptable to Celsius noting that all Celsius platforms will be powered off effective January 3, 2023 and will not be restarted during the transition period.
Earlier, Core Scientific accused Celsius of failing to pay its electricity bills on Oct. 19, citing non-payment as a major factor behind its liquidity issues after the Bitcoin miner filed for bankruptcy in under Chapter 11 on December 21.
On Dec. 28, Core Scientific filed a motion seeking approval to dismiss Celsius’s contracts, claiming that the company’s non-payment of its electricity bills constituted a material breach of contract.
According to court documents, terminating the deal would apparently allow Core Scientific to generate $2 million a month in revenue from the space currently occupied by the Celsius mining rigs.
The terms of the hosting agreements allowed Core Scientific to pass on some of the electricity costs to Celsius, which have increased significantly since Russia invaded Ukraine.
According to the motion to dismiss, covering the increased electricity costs cost Core Scientific nearly $7.8 million as of Dec. 28, and the miner noted that it could not afford to continue to bear the cost. burden of unpaid electricity costs of Celsius.
Related: Bitcoin Miners See Mixed Success in Battling Debt-Fueled Boom Crisis
The cost of production has increased for miners while the price of Bitcoin has fallen, which has eroded miners’ bottom line and contributed to the Hashprice, the revenue that Bitcoin miners can earn per unit of hash rate, further falling by 75% in 2022.
Bitcoin hash price index. Source: Luxor Technologies
The lack of miner profitability, combined with the costs associated with expansion efforts, caused many Bitcoin miners to struggle towards the end of 2022 and stock prices fell as a result.
Core Scientific saw its share price drop 99.15% over the year, while Iris Energy and Riot Blockchain saw drops of 91.79% and 85.09% respectively.
Bitcoin miner stock performance. Source: Luxor Technologies
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