Rhodium Enterprise sued for $26 million by Riot Platforms

Legal action has been taken by Riot Platforms, a crypto mining firm that was formerly known as Riot Blockchain. A suit has been filed against Rhodium Enterprises which is a Texas-based Bitcoin miner for not paying $26 million in fees for mining facilities.

It has been revealed in Riot Platform’s Q1 results which were published on May 10 that Rhodium Enterprises have breached the contract by not paying hosting and service fees. Rhodium is liable to Whinstone Bitcoin Mining, a fully-owned subsidiary of Riot Platforms. It is accused that Rhodium used the services of Whinstone but hadn’t paid them.

Allegation on Rhodium Enterprises

The petition was filed on May 2 in the District Court of Milam County in Texas against Rhodium Enterprises. The petitioners have demanded $26 million in unpaid fees and to reimburse their legal fees including the legal fees during proceedings.

Additionally, Riot has also claimed that Rhodium’s units were collecting power credit for a couple of years that they didn’t have any right to. Riot has also asked the court to conclude that the company doesn’t owe power credits to Rhodium. Due to the superseding of December 2020 agreements, the previous power credits have no legal leg to stand on from previous contracts.

Rhodium entities demanded power credits from Whinstone regarding power credits that were not related to the expired contracts. Whinstone denied any such request and proposed the court conclude it doesn’t owe Rhodium of any power credits.

The company further said that it is uncertain as of now to estimate the likelihood of recovering fees. They added that the litigation is still in its early stage and any outcome cannot be estimated as of now. According to the reports, Rhodium Enterprises has been served with a legal notice on May 8 and they have time to respond by May 30.

Riot’s Stance in the Industry

Riot while releasing its Q1 results has revealed that they have mined 2155 Bitcoins which is more than 50.5% in comparison to Q1 of 2022. Riot further made its stance clear by revealing that it had no affiliation with the banks that have recently collapsed. The company said that they did not have any banking transactions with Silicon ValleyBank, Silvergate Bank, or First Republic Bank and that they hold their cash and cash equivalents at multiple banking institutions.

The mining company has also anticipated that 2023 will be challenging for Bitcoin mining companies due to the decline in Bitcoin’s price and other macro and microeconomic factors. But the company believes that because of its liquidity and absence of long-term debt puts it in a position of advantage during these times.