BTC miner Rhodium faces lawsuit over an alleged $26M in unpaid fees: Report
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, Rhodium Enterprises.
According to Riot Platform’s Q1 2023 financial report published on May 10, Rhodium Enterprises allegedly breached its contract with Riot by failing to pay hosting and service fees associated with the use of Whinstone’s Bitcoin mining facilities, a wholly owned subsidiary of Riot.
A petition was filed against Rhodium Enterprises on May 2 in the District Court of Milam County in Texas, seeking to recover “more than $26 million” in alleged unpaid fees, as well as an legal fees and other expenses that are incurred during the legal proceedings.
Riot further requested that “certain hosting agreements” are terminated and proposed that it is exempt from repaying any outstanding power credits to Rhodium.
Although the amount of unpaid fees was disclosed in the report, 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.”
Rhodium was served on May 8, and have a deadline to respond by May 30, according to the financial report.
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Meanwhile, the report emphasized Riot’s growth in its mining operations, stating that it had mined “2,115 Bitcoins,” an increase of 50.5% compared to the first quarter of 2022.
Furthermore, stakeholders were reassured that Riot did 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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