The Bitcoin miner alleged that Northern Data failed to disclose $84 million in liabilities to a third party.
On Wednesday, September 21, Bitcoin miner Riot Blockchain (NASDAQ: RIOT) announced its decision to sue hosting firm Northern Data. In the lawsuit, Riot alleged breach of contract by Northern Data along with the failure to disclose important information.
Crypto Miner Riot Blockchain Filed a Lawsuit
This lawsuit relates to the Texas Whitestone Bitcoin mine, which is also the world’s largest by power capacity. Riot acquired the same facility from Norther Data last year for $651 million – $80 million cash and 11.8 million shares of Riot stock.
Riot Blockchain filed a lawsuit against Norther Data earlier this month on September 7. The Bitcoin miner alleged that Northern Data failed to disclose $84 million in liabilities to a third party that came into disclosure in April.
At the same time, Riot was in the final stage of negotiation and was planning to close the acquisition. However, Northern Data “delayed and obfuscated,” the entire deal claims Riot blockchain in the lawsuit. The Bitcoin miner further added that Northern Data continued to stall negotiations and has also delayed the $114 million payment that it owes to Riot.
Sailing Through the Crypto Winter
This year of the crypto market crash has been particularly very tough for crypto miners. Several Bitcoin miners had to sell their Bitcoins in order to cover the operational costs during the second quarter.
During the second quarter, Riot Blockchain suffered a loss of more than $1 billion of which $350 million came as a goodwill impairment charge while $99 million came through an impairment charge on its Bitcoin reserves. During the second quarter, the company mined a total of 1,400 Bitcoins.
On the other hand, the company has been facing a major battle surrounding the energy crisis in America. A longer-than-expected summer soared the energy demand in Texas, where Riot Blockchain has a huge infrastructure base. But Riot Blockchain played a smart game by curtailing its operations during that period. In return, Riot blockchain earned $9.5 million worth of power credits along with other additional benefits.
Earlier this year in April, Riot Blockchain also announced its decision of capacity expansion. It wants to increase its capacity by a total of 1GW, however, will happen in a phased manner. Riot Blockchain will establish a 400 megawatts (MW) capacity across a 265-acre site. In mid-2023, these mining machines using immersion-cooled technology and offering hosting services will go online. This phase will cost $333 million.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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