Riot Platforms, formerly known as Riot Blockchain, has initiated legal proceedings against Rhodium Enterprises, a Texas-based Bitcoin mining firm, in an attempt to recover more than $26 million in alleged unpaid mining facility fees.
The lawsuit alleges that Rhodium breached its contract with Riot by failing to fulfill its obligations regarding hosting and service fees associated with using Whinstone’s Bitcoin mining facilities, a subsidiary wholly owned by Riot.
According to Riot Platform’s recently published Q1 2023 financial report on May 10, the company filed a petition against Rhodium in the Milam County Court in Texas on May 2. Riot is seeking reimbursement for the unpaid fees as well as any legal expenses incurred throughout the process.
In addition, Riot has requested permission to terminate specific hosting agreements with Rhodium and proposed exemption from repaying any outstanding power credits upon cessation.
The financial report states that the likelihood of recovering the unpaid fees remains uncertain, given that the litigation is still in its early stages. Riot acknowledges that it cannot reasonably estimate the potential outcome or the magnitude of any unfavorable result at this point.
Rhodium Enterprises was officially served with the legal documents on May 8 and is required to respond to the allegations by May 30, as indicated in the report. Meanwhile, Riot Platforms reported a significant increase in its mining activities, having mined 2,115 Bitcoins during Q1 2023, representing a 50.5% growth compared to the same period in the previous year.
It is worth noting that Riot clarified it did not have any banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank. The company also stated that its cash and cash equivalents are held in multiple banking institutions, and it is unaffected by recent bank collapses.
Riot anticipates that the crypto mining sector will continue to face challenges in 2023 due to the substantial decline in Bitcoin prices and various national and global macroeconomic factors.
However, the company believes that its favorable industry positioning, liquidity, and lack of long-term debt will enable it to capitalize on industry consolidation and emerge stronger.
As the legal battle unfolds between Riot Platforms and Rhodium Enterprises, the outcome will be closely watched by industry observers and market participants, who recognize the significance of such disputes in shaping the dynamics of the evolving crypto mining sector.
