Celsius Successor Sues for $17M over Failed Bitcoin Mining Site

Barber Lake Development, a successor-in-interest of Celsius Network’s mining arm, has filed a lawsuit against Priority Power Management (PPM) to recover over $17 million in refundable payments.

Barber Lake filed the complaint in a U.S. bankruptcy court on Monday, stating that Celsius Mining paid PPM an upfront fee of $17 million in February 2022 to develop the Barber Lake bitcoin mining site in Mitchell County, West Texas.

According to the complaint, the payments were supposed to be refundable if PPM failed to meet certain deliverables necessary for the project to proceed. Barber Lake alleges that PPM did not obtain the required regulatory approvals or satisfy other deliverables outlined in the initial letter of intent.

Despite this, Barber Lake claims that PPM refused to refund the payments, asserting that the funds became non-refundable as of March 31, 2022. Barber Lake contends that this refusal constitutes a breach of contract.

Barber Lake further accuses PPM of using the funds to enhance the value of the Barber Lake site, potentially for a third-party sale, thus unjustly enriching itself at the expense of Celsius Mining.

The case is part of the broader Chapter 11 proceedings involving Celsius Network and its affiliates, which filed for bankruptcy in July 2022. As Celsius emerged from Chapter 11 earlier this year, it created a new company named Ionic Digital to be the successor of its bitcoin mining arm. Ionic Digital conveyed the outstanding legal claims and recoveries related to the Barber Lake site to Barber Lake Development.

Celsius isn’t the first bitcoin mining company to have a dispute with PPM, highlighting recurring conflicts between PPM and its clients in the mining sector.

In March 2023, a bankruptcy judge approved Core Scientific (NASDAQ: CORZ)’s transfer of over $20 million worth of electrical equipment to PPM, Core Scientific’s exclusive energy negotiator. The dispute involved two facilities—also in West Texas—that were expected to provide 1 gigawatt of power capacity.

Core Scientific stopped payments to PPM in May 2022 after it became clear that the facilities would not receive the anticipated power load. PPM, claiming $30 million owed, received a secured claim for $20.8 million, deemed paid by the equipment transfer.