System data takes up almost all my SSD! 800 GB!

Have to ask, is this specific Issue affecting Other Computers using the Shared iCloud setup ?

Do not know if you want a possible solution but here goes anyways.

On the Affected Computer with this issue, sign Out of iCloud completely

This will effective separate the documents from syncing with iCloud leaving only the Locally Stored Files.

Get a reliable and large enough Drive with at least double your needs to handle all your Locally Stored Files.

Move as Much as possible of the files OFF the Internal Drive to the External Drive.

Now Log into www.icloud.com via Browser of Choice and remove ALL the Files off of iCloud.

Make sure that if there is a Trash Bin on iCloud to empty that too.

Sign into iCloud on the computer again.

Allow the Sync from Computer to iCloud to perform this action

Thereafter, closely manage what files are added to the computer so this " Occurrence " does not repeat itself.

Using iCloud to store Data Off the computer is not doing to work.

Suggest using the " Optimize Storage " feature in below image

Further, iCloud was intended and designed as a Conduit to ave files in iCloud so they can be Synced to Other Devices that are signed into iCloud and using the same Apple ID.

iCloud is not intended to be used as a Storage Drive like one would do with an External Drive and Archive Data OFF the Computer.

In really, what is on iCloud has a Copy of that same Data on the Internal Drive.

That is so when there is No Internet Connection, the user can still work on the files.

When an Internet Connection is established , the changes are uploaded onto iCloud.

Files that you delete are not removed immediately. They are stored in a local snapshot for about 24 hours. If you do need the storage before then, it is supposed to automatically free up the space. However, you can expect to get some error messages regarding running out of storage space before that happens.

I don't know if that is related to the crash or not, or even what this crash constitutes. Regardless, I can imagine what you are doing to that machine where you can delete 800 GB and then immediately require another 800 GB of storage. If your storage needs are that extreme, then I recommend purchasing an external RAID storage device.

That's never going to work.

First of all, you almost certainly have nowhere near 60 GB of free space. People often get confused by the operating system's terminology of "free" and "available" storage space. Anywhere you see the word "available" being used, simply disregard that completely. It's totally wrong. There are only a few places that will tell you the actual amount of "free" storage you have. The easiest place to find this information is Disk Utility.

Now, your next problem is trying to move data from "iCloud + local" to the external storage. You can't do both. You can move any local files to external storage. Once you free up enough space on your hard drive, then you can start working on iCloud data. But first, you will need massive amounts of truly free storage to begin.

Before you can copy any data from iCloud to your external, you have to download the data from iCloud to your boot drive. That is actually going to consume storage, not free it. Then, when you move it to external, you'll have to wait the 24 hours again before you have more free storage to work with. And keep in mind that you don't actually have 60 GB of storage free. You likely have 5 GB or less. Ergo, this plan is never going to work.

My recommendation is to simply review your total storage use and needs across all platforms. What do you need constant access to at all times? What can sit in iCloud until you need it? What can sit on some external storage. Don't forget about backups and archives. iCloud is not a backup. Time Machine is not an archive. If you are moving storage onto a single external drive, that drive could fail and then your data is gone. Remember that iCloud is synced storage. You can't use it until it is downloaded to your hard drive.

If you need to regularly move 800 GB of data, then your storage needs are likely in the 10+ terabyte range and you will need multiple drives of that size.