Report: Rhodium, a BTC miner, sued for allegedly failing to pay $26M in fees

Crypto Mining Firm Riot Platforms Seeks to Recover More Than $26 Million in Unpaid Fees from Rhodium Enterprises

Crypto mining firm Riot Platforms, formerly known as Riot Blockchain, has filed a lawsuit against Rhodium Enterprises, a Bitcoin miner based in Texas. Riot Platforms seeks to recover more than $26 million in alleged unpaid mining facility fees. The company filed a petition in the District Court of Milam County in Texas on May 2, 2023, to recover the unpaid fees and to be reimbursed for any legal fees incurred. According to Riot Platform’s Q1 2023 financial report published on May 10, Rhodium Enterprises 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. The report also revealed that Riot had mined 2,115 Bitcoins in Q1 2023, an increase of 50.5% compared to Q1 2022. Riot Platforms is seeking to terminate certain hosting agreements with Rhodium Enterprises and be relieved of refunding any outstanding power credits upon cessation. Rhodium was served on May 8, with a deadline to respond by May 30, according to the report. However, the likelihood of recovering the unpaid fees is uncertain at this stage, as stated in the report: “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.” Riot Platforms did not have any banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank, and currently holds its cash and cash equivalents at multiple banking institutions. The company anticipates that crypto mining companies will continue to face challenges in 2023 due to the significant price decline of Bitcoin and other national and global macroeconomic factors. However, Riot’s relative position in the industry, as well as its liquidity and absence of long-term debt, makes it well positioned to benefit from such consolidation.

Summary

• Crypto mining firm Riot Platforms has filed a lawsuit against Rhodium Enterprises, a Bitcoin miner based in Texas.
• Riot Platforms seeks to recover more than $26 million in alleged unpaid mining facility fees and be reimbursed for any legal fees incurred.
• 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.
• Riot Platforms is seeking to terminate certain hosting agreements with Rhodium Enterprises and be relieved of refunding any outstanding power credits upon cessation.
• Riot Platforms had mined 2,115 Bitcoins in Q1 2023, an increase of 50.5% compared to Q1 2022.
• Riot Platforms did not have any banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank, and currently holds its cash and cash equivalents at multiple banking institutions.
• Riot anticipates that crypto mining companies will continue to face challenges in 2023 due to the significant price decline of Bitcoin and other national and global macroeconomic factors.