Crypto mining firm Riot Platforms seeks to terminate “certain hosting agreements” with Rhodium and requests exemption from any owed power credits to the counterparty.
Crypto mining firm Riot Platforms – formerly Riot Blockchain – has taken legal action in an effort to recover “more than $26 million” in alleged unpaid fees from Texas-based Bitcoin (BTC) miner, Rhodian Enterprises.
According to Riot Platform's Q1 2023 financial report published on May 10, Whinstone, a wholly owned subsidiary of Riot, filed a petition on May 2 in the 20th District Court of Milam County, Texas. It alleged that Rhodium Enterprises breached its contract by failing to pay hosting and service fees associated with its use of Whinstone's facilities for mining operations.
Riot is seeking to recover “more than $26 million,” plus legal fees and other expenses that are incurred during the legal proceedings, as outlined in the report.
It was further requested that “certain hosting agreements” with Rhodium are terminated and proposed that it is exempt from repaying any outstanding power credits to the Texas-based Bitcoin mining company.
Although the disclosure of unpaid fees was stated, Riot was transparent with stakeholders, acknowledging that “the likelihood” of recovering the funds at this stage is uncertain. It noted:
“Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.”
It was reported that Rhodium was served on May 8, and have until May 30 to respond.
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The report also emphasized Riot’s growth in mining operations, stating that it had mined “2,115 Bitcoins,", representing an increase of 50.5% from the number of Bitcoins mined during the first quarter of 2022.
Furthermore, stakeholders were reassured in the report that Riot does not have any affiliations with the banks that have experienced collapses in recent times. It noted:
“We did not have any banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank, and currently hold our cash and cash equivalents at multiple banking institutions.
Riot anticipates that crypto mining companies will continue to experience challenges due to the "significant price decline of Bitcoin" and “other national and global macroeconomic factors,” as seen in 2022.
It was stated that given Riot’s "relative position" in the industry, “liquidity and absence of long-term debt,” it is positioned to “benefit from such consolidation.”
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