not quite sure about what is happening here fire starts spreading randomly around the world w/o reason and afther a short time the world crashes.

there is a crash log that might help:
New Paste 1.txt

I think I managed to narrow it down and seems like lithium is the problem, I can understand that that can stop the world from generating but random fires spawning everywhere still freaks me out.
lithium.txt

When I was thinking "what's the worst that can happen; it's not like multithreading minecraft can set anything on fire right"

I was apparently wrong

That is VERY ODD

After I've finished the current release I'll poke lithium and see what I can do

I just ran into the same issue. I don't know why exactly but you can fix that by copying all the configuration values (from https://github.com/jellysquid3/lithium-fabric/wiki/Configuration-File) into the lithium configuration file and setting each value to the default value.
lithiumconfig.zip

Just tried the latest version it seems like it's still happening I don't really think it's going to be a problem since Lithium isn't getting updates anymore but still puzzles me that something like that can happen lol

@Aer-ink @Psychotrickser Thanks @ChocoMew who have found the problematics mixins. (at least we think that we have all of them for now).
Copy-paste from the message I have written on Discord:

To use Lithium-forge with MCMT please follow this:
BEFORE putting MCMT on your world add the text that will disable problematics (1) mixins in the lithium config:

mixin.world.chunk_access=false
mixin.world.tick_scheduler=false
mixin.alloc.chunk_ticking=false
mixin.world.block_entity_ticking=false
mixin.alloc.chunk_random=false

(1) It could crash or put YOUR WORLD IN FIRE when those mods are combined without a configuration. See this: #18 (comment)