Until January, Megaupload was a major customer of Carpathia Hosting. Now Megaupload is facing a federal indictment, and its servers have become a major burden for Carpathia.

Carpathia is the proud owners of 1,103 servers with approximately 25 petabytes of Megaupload data on them. The government seized Megaupload's assets, so the firm can't pay its bills and Carpathia has cancelled Megaupload's service contract. But Carpathia hasn't been able to reuse the servers for other customers because doing so might interfere with the Megaupload court case or invite lawsuits from Megaupload customers who lose data as a result.

On Tuesday, the hosting firm filed a request with a Virginia federal court asking for relief from the financial burden of continuing to maintain the servers. The company estimates it pays $9,000 per day for rack space, power, and connectivity. In addition, the servers themselves are worth $1.25 million. Since Megaupload is no longer paying for service, Carpathia would like to re-allocate the servers for the use of other customers.

The Electronic Frontier Foundation has intervened in the case on behalf of Megaupload's users, some of whom used the service for legitimate file transfers. EFF has argued that these innocent users have a right to this data, and has threatened to sue to vindicate these users' rights.

Carpathia calls 25 petabytes an "historically and mind-bogglingly large amount of data," and argues that if that data needs to be preserved, someone else—the government, Megaupload, or an interested party such as the MPAA or EFF—should bear the costs of preserving the data. The problem is that so far no one has come up with a way to satisfy all interested parties. Megaupload is willing to take custody of the data, but the government and the MPAA have both objected, perhaps fearing that Megaupload would destroy evidence. The other parties—the government, EFF, and MPAA—have all said they're not willing to take custody of the servers.

Carpathia suggests several possible resolutions. One would be to allow Megaupload to put its site back online for a limited period of time so that legitimate users could download their data; after that, the data would be deleted and Carpathia would be free to do what it wanted with its servers. Another option would be for the courts to order a third party—most likely the government or Megaupload—to take custody of (and pay Carpathia for) the servers. A third would be for the parties to pay Carpathia for the costs of continuing to maintain the servers. Carpathia wants the government to pick one of these options, because right now the situation is costing it thousands of dollars a day.