The $45 Million Power Bill Fight: Celsius v. Core Scientific

What Happened

Celsius Mining was one of the largest hosting customers in the country. Core Scientific was one of the largest hosts. In 2022 both companies ended up in bankruptcy, and their hosting contract turned into a court fight that ran across two bankruptcy courts.

The dispute had two parts. First, Celsius said Core did not deploy all the machines it promised. Celsius claimed only 6,564 of 10,885 contracted rigs were brought online, or about 21.5 megawatts delivered against a commitment of nearly 80. Second, Core billed Celsius more than $3.65 million in power cost pass through charges when electricity prices spiked. Celsius said the contract was a fixed price deal. In its reading, the pass through clause only covered new taxes and government fees, not ordinary increases in the utility bill.

Core read the contract the other way, said Celsius owed about $5.4 million, and powered down Celsius machines in January 2023. Celsius eventually claimed over $300 million in damages. In September 2023 the two sides settled in a deal valued around $45 million, and Celsius picked up one of Core’s Texas sites in the process. The coverage cited below does not describe any court ruling on what the clause meant.

Why This Case Draws Attention

I follow this case because it shows how much of a hosting contract is really about power. Electricity is often the largest operating cost in bitcoin mining. When a contract describes the hosting rate as fixed, the question of who bears a change in power prices can carry a large share of the value of the deal. I walk through other common clauses in Mining Hosting Agreements: Terms That Recur.

Colocation contracts in traditional data centers commonly spell out power rates, escalators, and pass through events in detail. Crypto hosting grew quickly during a period of rising bitcoin prices, and many hosting contracts were signed in a short time. In 2022 energy prices rose and bitcoin fell, and a number of hosting relationships ended up in disputes over contract wording, including this one.

Issues This Case Raises

The settlement ended this dispute. The case still points to broader questions on which hosts and customers could take different positions.

• What can be passed through? Celsius read the clause to cover new taxes and government fees. Core read it to allow the power cost charges it billed. Clauses in the industry range from short lists of specific costs to any rise in the host’s utility bill.
• How are pass through charges supported? Pass through charges may come with utility invoices or other documents. Whether and how those are shared depends on the contract, and the parties can disagree about what support is enough.
• How do deployment commitments interact with payment? Celsius said 6,564 of 10,885 contracted rigs came online. In disputes like this, a host may point to conditions such as equipment delivery or site power, while a customer may point to the capacity it was promised. Contracts tie payment to promised or energized capacity in different ways.
• When may a host power down machines? Core powered down Celsius machines in January 2023 during the billing dispute. Contracts vary in whether they address shutdown rights, notice periods, and what happens to the customer’s revenue during an outage. A similar question came up when Whinstone cut power to Rhodium.

Background on hosting contract disputes generally is on the crypto hosting practice page.