Core Scientific Powers Down Celsius 37,000 Mining Rigs
Coinspeaker
Core Scientific Powers Down Celsius 37,000 Mining Rigs
Core Scientific Inc (OTCMKTS: CORZQ), the bankrupt crypto miner and hosting service provider has effectively powered down as many as 37,000 mining rigs belonging to Celsius Network. Both companies, now bankrupt had been in a business relationship that turned unfavorable for Core Scientific as Celsius Network was unable to meet up with the costs of electricity, a key cost in mining Bitcoin (BTC).
Core Scientific was the hosting service provider for Celsius Network’s mining activities as approved by the court following its bankruptcy. According to Core Scientific, the increment in energy fees that came as a result of the ongoing war in Ukraine pushed the energy costs of Celsius Network to $7.8 million.
In earlier filings, Core Scientific blamed the inability of Celsius Network to meet up with the costs as one major reason why it faced a liquidity crunch pushing it to also file for bankruptcy last month. With the 37,000 mining rigs now offline, Core Scientific said it is on track to increase its revenue by at least $2 million if the price of Bitcoin stays around $16,700.
Besides rising energy prices, the major challenge that all miners irrespective of their geographical location have been facing over the past year is the volatility in the price of Bitcoin. Currently trading at $16,848.42 which favors Core Scientific, the coin has dropped by over 63% in the year-to-date period.
This uncertainty in the potential price growth of Bitcoin has forced many miners to file for bankruptcy as revenue and profits are no longer matching operational costs. By cutting power to the Celsius Network’s miners, Core Scientific can now appropriate the space in a way to bolster its own bottom line across the board.
Core Scientific and the Fight for Survival
Core Scientific is just one of the many names in the crypto ecosystem that is currently battling a liquidity crisis, however, chances are that the company’s creditors will not be as burned as those of other platforms that have also filed for bankruptcy.
Since the bankruptcy filing, it tendered back on December 21, Core Scientific has been pushing for a number of ways to stay afloat and minimize the impact of the liquidity crunch on its investors. One major way it resolved to do this is to continue its mining operations.
While at the point of filing for bankruptcy, the company was generating a positive cash flow, however, it was unable to finance its agreements on equipment leases.
While Core Scientific Inc’s financial battery has been visible, the move to cut off Celsius Network mining rigs seems to be resonating positively with its investors as its shares closed Tuesday’s session up 81.485 to $0.074.
Other distressed crypto miners include but are not limited to Riot Blockchain Inc (NASDAQ: RIOT) and Argo Blockchain Plc (LON: ARB).