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Core Scientific, a Bitcoin (BTC) mining company currently in bankruptcy, has contested a $4.7 million administrative claim made by crypto lender Celsius Network, resulting in a dispute between the two entities regarding their contractual responsibilities.
In an objection submitted to the Texas bankruptcy court on May 5, Core Scientific requested that the $4.7 million administrative claims from Celsius Network be dismissed, asserting that the firm has not demonstrated its entitlement to such a claim.
“Celsius’ request for allowance and immediate payment of the alleged admin claim disregards the fact that Core has significant claims against Celsius, which Core believes surpass the alleged admin claim from Celsius,” stated the objection.
For context, Core entered into a contract with Celsius in 2020 to manage its cryptocurrency assets within Core’s data centers. However, following a rise in energy prices, Core transferred these additional expenses to Celsius, a provision that was reportedly included in the original agreement.
Core Scientific’s 2020 contract with Celsius Network. Source: Court filing
Although Celsius initially covered these costs, Core Scientific asserted in the objection that the crypto lender halted payments after filing for bankruptcy.
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“If anyone has been unjustly enriched here, it is Celsius,” Core Scientific noted in the objection. The now-defunct Bitcoin miner claimed that Celsius has been “holding onto nearly $8 million that it owes to Core” due to a “clear post-petition violation” of the established dispute resolution process.
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Celsius currently owes Core Scientific approximately $11 million, a figure that incurs an additional $28,000 in fees and interest for each day that passes, according to the legal representatives of the Bitcoin mining firm.
The dispute between the two companies has been ongoing since October 19, when Core Scientific first accused Celsius of neglecting to pay its electricity bills, identifying these non-payments as a major contributor to the liquidity challenges that ultimately led to the Bitcoin miner’s Chapter 11 bankruptcy filing on December 21.
“The millions of dollars Celsius shortchanged Core after Celsius’s bankruptcy filing plus the millions of dollars in litigation…significantly contributed to Core’s liquidity drain and eventual chapter 11 filing.”
On December 28, Core Scientific submitted a motion seeking permission to reject Celsius’ contracts, arguing that the firm’s failure to pay its electricity bills represented a substantial breach of contract. On January 3, Celsius consented to allow Core Scientific to deactivate over 37,000 Bitcoin mining rigs that the miner was hosting for the crypto lender.
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