Riot Platforms, formerly known as Riot Blockchain, has initiated legal action against Rhodium Enterprises, a Bitcoin miner based in Texas. The crypto mining firm is seeking to recover over $26 million in alleged unpaid fees related to the use of Whinstone’s Bitcoin mining facilities, which is a subsidiary of Riot Platforms. According to Riot Platform’s Q1 2023 financial report, Rhodium Enterprises breached their contract by failing to make payments for hosting and service fees.
On May 2, Riot filed a petition against Rhodium Enterprises in the District Court of Milam County, Texas. The petition aims to recover the outstanding amount of over $26 million and also requests termination of certain hosting agreements with Rhodium. Riot has also proposed that they should not be obligated to repay any outstanding power credits to Rhodium.
The report acknowledges that it is currently uncertain regarding the likelihood of recovering the unpaid fees. Riot Platforms stated that due to the early stage of the litigation, it is not possible to reasonably estimate the probability of an unfavorable outcome or the potential magnitude of such an outcome. Rhodium Enterprises was officially served on May 8 and is expected to respond by May 30, as per the legal process.
In the meantime, Riot reported that they mined 2,115 Bitcoins in Q1 2023, marking a 50.5% increase compared to the same period in 2022. The report also clarified that Riot had no banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank, and their cash and cash equivalents are held in multiple banking institutions.
Riot anticipates that crypto mining companies will face challenges in 2023 due to the significant decline in Bitcoin prices and other macroeconomic factors. However, Riot believes its relative position in the industry, along with its liquidity and absence of long-term debt, positions them well to benefit from industry consolidation.
