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September 15, 2023 Coin Telegraph

Celsius

Though subject to court approval, the two firms have agreed on a settlement in which Celsius will purchase a $45-million mining data center from Core Scientific for $14 million.

Crypto mining firm Core Scientific has announced an agreement with lending company Celsius Network to settle a legal battle which had been ongoing for months.

In a Sept. 15 announcement, Core Scientific said it had agreed to sell a Bitcoin (BTC) mining data center to Celsius in exchange for $14 million in cash to settle “all existing litigation”. The value of the Texas-based data center was roughly $45 million, and the deal will need court approval before being finalized.

The conflict between the two firms largely started in October 2022, when Core Scientific alleged Celsius had failed to pay its bills, while Celsius claimed the mining firm had not been deploying rigs as required under their contract. Both firms separately filed for Chapter 11 bankruptcy protection in the United States: Core Scientific in Texas in December 2022 and Celsius in New York in July 2022.

*Sept. 14 court filing on the proposed settlement between Core Scientific and Celsius. Source: Stretto*

The Texas data center, which will likely go to Celsius’ mining arm if the deal is approved, was reportedly non-operational but capable of supplying 215 megawatts to BTC rigs. According to Celsius CEO Chris Ferrero, crypto mining firm US Bitcoin played a “key supporting role in structuring and executing the transaction” in addition to being a party to a winning bid for Celsius’ assets in bankruptcy proceedings.

The litigation between the two firms is separate from the criminal charges against former Celsius CEO Mashinsky and former chief revenue officer Roni Cohen-Pavon. Mashinsky was arrested in July and has pleaded not guilty to charges related to fraud and manipulating the market. Cohen-Pavon pleaded guilty to 4 charges on Sept. 13 and will be sentenced in December.

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Core Scientific moves for September bankruptcy exit, expects $46M boost

May 24, 2023 Coin Telegraph

Core Scientific moves for September bankruptcy exit, expects M boost

$46 million

Core Scientific said favorable market conditions have increased its liquidity position and its bankruptcy restructuring plan has been revised.

A restructuring plan for bankrupt Bitcoin (BTC) miner Core Scientific could be finalized by September and it expects to exit proceedings with an additional $46 million due to recent favorable market conditions.

In a May 22 filing in a Texas Bankruptcy Court, Core Scientific’s lawyers said its liquidity position has improved considerably since it filed for bankruptcy and as a result, it plans to file a reorganization plan in the near future.

The plan is currently being negotiated with key stakeholders, and according to the filing, the firm is “seeking to build as much consensus as possible” about how a new Core Scientific would look after emerging from its bankruptcy proceedings.

*The next steps in Core Scientific’s Chapter 11 proceedings. Source: Stretto*

A Chapter 11 bankruptcy allows a firm to continue operating until stakeholders are able to agree on a restructuring plan which could involve measures such as the downsizing of business operations to reduce debt or the liquidation of assets to repay creditors.

The firm pointed to decreasing power costs, increasing Bitcoin prices and an increase in the blockchain’s hashrate as the primary market factors contributing to its liquidity boost.

*Core Scientific’s initial liquidity estimates vs current. Source: Stretto*

On Dec. 21, 2022, when Core Scientific filed for bankruptcy, Bitcoin’s price was $16,904, according to CoinMarketCap. Since then, the price has shot up by over 60%, currently sitting at around $27,000.

Additionally, power prices have decreased by 24% since the petition date according to the filing, while the network hashrate has jumped by 54%.

As a result of more favorable market conditions, Core Scientific estimates it will have an additional $46 million in funds once a restructuring plan is finalized, despite delays in the bankruptcy proceedings.

The miner is also expecting a significant windfall from Celsius Network claiming the bankrupt crypto lender owes it some $11 million.

The two firms are currently engaged in a lengthy court battle that began on Oct. 19, 2022, when Core Scientific first accused Celsius of failing to pay its power bills.

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‘Unjustly enriched:’ Core Scientific knocks back $4.7M claim from Celsius

May 9, 2023 Coin Telegraph

‘Unjustly enriched:’ Core Scientific knocks back .7M claim from Celsius

Bitcoin

Core Scientific has rejected a multi-million-dollar administrative claim from Celsius Network, arguing it's owed an even higher amount from the crypto lender.

Bankrupt Bitcoin (BTC) mining firm Core Scientific has objected to paying a $4.7 million administrative claim put forward by crypto lender Celsius Network, leading to a battle between the firms over contractual obligations.

According to the objection, which was filed in Texas bankruptcy court on May 5, Core Scientific has asked that Celsius Network’s $4.7 million administrative claims be rejected as the firm cannot prove it is entitled to one.

“Celsius’ request for allowance and immediate payment of the Celsius alleged admin claim ignores that Core has substantial claims against Celsius, which Core believes exceed the Celsius alleged admin claim,” wrote the objection.

For context, Core first signed a contract with Celsius in 2020 to host its cryptocurrency holdings in Core’s data centers. However, due to an increase in the price of power, Core passed these additional costs on to Celsius, an allowance that was reportedly stipulated in the original contract.

*Core Scientific’s 2020 contract with Celsius Network. Source:* *Court Filing*.

Despite Celsius initially paying these costs, the crypto lender ceased payments after it filed bankruptcy, Core Scientific claimed in the objection.

“If anyone has been unjustly enriched here, it is Celsius,” wrote Core Scientific in the objection. According to the now-defunct Bitcoin miner, Celsius has been “sitting on almost $8 million of money it owes to Core'' due to a “blatant post-petition violation” of the agreed-upon dispute resolution mechanism.

In total, Celsius now allegedly owes Core Scientific approximately $11 million, a sum that accrues an additional $28,000 in fees and interest with each passing day, the Bitcoin mining firm's lawyers argued.

The conflict between the two firms has been raging since Oct. 19, when Core Scientific first accused Celsius of failing to pay its power bills, citing the non-payments as a significant factor in the liquidity issues that led to the embattled Bitcoin miner filing for Chapter 11 bankruptcy on Dec. 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 Dec. 28, Core Scientific filed a motion seeking approval to reject Celsius’ contracts, claiming the firm’s failure to pay its power bills constituted a material breach of contract. On Jan. 3 Celsius agreed to let Core Scientific shut down more than 37,000 Bitcoin mining rigs the miner was hosting for the crypto lender.

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Core Scientific debtors petition bankruptcy court to approve new president

April 11, 2023 Coin Telegraph

Bankruptcy

The debtors appointed Adam Sullivan, a managing director at investment banking firm XMS Capital Partners, to assume the role of president amid the firm’s bankruptcy proceedings.

The debtors behind bankrupt cryptocurrency mining firm Core Scientific filed a motion for the approval of hiring a permanent president.

In an April 10 filing with United States Bankruptcy Court for the Southern District of Texas, Core Scientific said it was addressing “a gap in the Debtors’ management team” prior to the firm filing for bankruptcy in December 2022. The debtors appointed Adam Sullivan, a managing director at investment banking firm XMS Capital Partners, to assume the role of president amid the company’s bankruptcy proceedings.

“Mr. Sullivan is no stranger to the digital asset mining space and has extensive experience in the digital asset investment banking industry,” said the filing. “[He] will principally work on financial and strategic matters, including working with customer, supplier, and creditor relationships and assisting with the negotiation of a plan of reorganization in his capacity as a member of the management team.”

According to the debtors, Sullivan will receive a base salary of $500,000 as well as a guaranteed annual bonus of at least $500,000 in 2023 in his role as president. Soon-to-be former Core Scientific president Todd DuChene will stay on as the firm’s chief legal officer as well as assume the role of chief administrative officer.

Prior to its bankruptcy filing, Core Scientific reported it expected its “existing cash resources will be depleted by the end of 2022,” citing the low price of Bitcoin (BTC), increased electricity costs, and litigation with crypto lender Celsius. The mining firm had hosted more than 37,000 rigs for Celsius and alleged in court filings the crypto lender had failed to pay its power bills, contributing to its liquidity issues.

Today’s $CORZQ daily self-mined #Bitcoin for the last reported 24-hour period (10-APR-2023): 37.7 pic.twitter.com/ZlnlgfhzhW
— Core Scientific (@Core_Scientific) April 11, 2023

Though moving through bankruptcy proceedings, the Texas firm continues to mine BTC despite disruptions to its supply of rigs. The bankruptcy court approved Core Scientific handing over more than 27,000 miners to the New York Digital Investment Group in February as part of a deal to pay off roughly $38 million in debt.

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Core Scientific to transfer $20M of equipment to settle bankruptcy dispute

March 21, 2023 Coin Telegraph

Core Scientific to transfer M of equipment to settle bankruptcy dispute

Bankruptcy Court

Millions of dollars worth of electrical equipment will be transferred to the crypto miners' exclusive energy negotiator to settle a payments dispute.

A $20 million settlement between Bitcoin (BTC) miner Core Scientific and its energy negotiator Priority Power Management has been approved by the judge in Core Scientific’s bankruptcy proceedings.

In a March 20 filing in the United States Bankruptcy Court for the Southern District of Texas, Judge David Jones signed off on allowing Core Scientific to transfer around $20.8 million worth of equipment to Priority Power.

The companies had been in a dispute over two Texas-based mining facilities that were slated to receive 1,000 megawatts of power between them to increase Core Scientific’s mining capacity.

*Core Scientific’s facility in Marble, North Carolina. Source:* *Core Scientific*

In a declaration filed on March 19, Core Scientific executive Michael Bros said it brought on Priority Power in June 2021 to exclusively manage, consult and develop infrastructure to fulfil its energy needs “on a short ramp-up schedule.”

However, Bros said that by May 2022, “it became clear that the Facilities would not receive the anticipated power load,” and Core Scientific stopped making payments to Priority Power, which “suffered significant losses.”

Priority Power then claimed Core Scientific owed it around $30 million for the work it had performed before the miner filed for Chapter 11 bankruptcy in December last year.

The judge’s decision means that Priority Power will be given $20.8 million worth of equipment from the now-bankrupt firm, including electrical equipment such as power transformers and breakers.

The deal also promises that Core Scientific “will introduce” Priority Power “to any acquirer” of its sites in Texas, so that it can potentially go into an energy management and consulting agreement with the new owners.

Priority Power will also get to keep $514,000 earned by curtailing power for Core Scientific. The miner will also reimburse the firm “for legal fees and out-of-pocket expenses up to $85,000.”

Core Scientific filed for bankruptcy due to pressure from falling company revenues, low Bitcoin prices and litigation costs against the bankrupt crypto lender Celsius.

Core Scientific has been forced to hand over equipment before, making made a deal in February with New York Digital Investment Group to pay off a $38.6 million debt by handing over more than 27,000 mining rigs that were used as collateral.

Marathon Digital bungles crypto impairment sums, will reissue financials

March 1, 2023 Coin Telegraph

accounting

The Bitcoin miner received a letter from the Securities and Exchange Commission highlighting accounting mistakes it made on multiple financial disclosures.

Bitcoin (BTC) miner Marathon Digital will reissue a number of previous financial statements after the United States Securities and Exchange Commission pointed out some accounting errors the firm made.

According to a Feb. 27 SEC filing, Marathon will restate its unaudited Q1, Q2, and Q3 quarterly reports from both 2021 and 2022 in addition to its audited annual report from 2021.

Marathon noted that affected financial statements, related earnings releases and other financial communications during these periods “should not be relied upon.”

The issues highlighted by the SEC on Feb. 22 were Marathon’s method for calculating impairment on digital assets, as well as Marathon’s determination that it had acted as an agent while operating a Bitcoin mining pool rather than a principal.

A principal is an entity that has the legal authority for decisions, while an agent is an entity that can only act on behalf of a principal.

Marathon noted that by changing the determination of its role in operating the pool from an agent to a principal, revenues and cost of revenues will see minor increases but does not believe the change will impact its bottom line.

“The restatement of the Impacted Financial Statements is not expected to have any impact on total margin, operating income or net income in 2021 or in any of the interim periods in 2021 or 2022.”

As a result of the accounting issues, Marathon postponed its fourth-quarter 2022 earnings call, which was set to take place on Feb. 28, and will postpone the publication of its corresponding financial results.

Today, we announced that we are cancelling our webcast and conference call for Q4 & FY 2022, initially scheduled for today at 4:30 p.m. ET, and are postponing the publication of our corresponding financial results. For more, please see this press release: https://t.co/UAryIr56aC
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) February 28, 2023

Marathon intends to file its results for 2022 by March 16. It has notified the SEC it would take up to 15 days to make the necessary corrections to the report, which was previously due by March 1.

The miner announced on Feb. 2 that it had sold 1,500 BTC throughout January, marking the first time it had sold Bitcoin since Oct. 1, 2020, as it looks to build up a “war chest” of both cash and Bitcoin and ensure it can be flexible throughout 2023.

While 2022 proved to be a tough year for Bitcoin miners — leading to the capitulation of firms such as Core Scientific in December — an increasing BTC price and stable electricity prices have helped the industry rebound strongly so far in 2023, with production and hash rates generally up across the board.

Core Scientific to hand over 27K rigs to pay $38M debt

February 3, 2023 Coin Telegraph

Core Scientific to hand over 27K rigs to pay M debt

Coin Telegraph

The bankrupt crypto mining firm believes that the long-term benefits outweigh the immediate loss of handing over the machines.

Crypto mining firm Core Scientific made a deal with the New York Digital Investment Group (NYDIG) to pay off an outstanding debt of $38.6 million by handing over more than 27,000 mining machines used as collateral.

In a court filing, the company said the mining rigs were no longer essential to its operations and plans. The firm is now waiting to get the approval of the United States Bankruptcy Court for the Southern District of Texas, which is in charge of the proceedings.

While the company accepted that the move would negatively impact its revenue, Core Scientific highlighted that the long-term benefits of paying off its debt “outweigh the immediate loss.” The crypto-mining firm believes that the transfer is the first step toward becoming more profitable and sustainable.

The firm is also shifting its operations to what it described as a “somewhat smaller, but more efficient” fleet of mining rigs which were in storage and not mining Bitcoin (BTC). The company plans to mitigate some of the losses incurred by the transfer of assets by installing the S19 XP mining rigs, which are not currently in use.

The crypto mining company filed for Chapter 11 bankruptcy on Dec. 21. The filing happened months after the company revealed that it was going through financial distress in a filing with the Securities and Exchange Commission. At the time, the company cited increased electricity costs, an increase in the global Bitcoin hash rate, low Bitcoin prices and the Celsius bankruptcy as the reasons for its financial struggles.

On Jan. 31, the bankruptcy court approved the mining company’s plan to borrow $70 million to replace its existing loan. With this, Core Scientific can take out a loan from investment bank B. Riley which is also one of the firm’s creditors.

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Core Scientific

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