The American-based Bitcoin mining company Riot Platform (RIOT) filed a lawsuit against Rhodium Enterprises for breaching the hosting contract. The court filing revealed that Rhodium miners claimed that Riot Group owed them $26 million charged for hosting fees.
On the contrary, the Riot team urged the court to dismiss the claims after submitting the Q1 earnings. Per the revenue report, the Bitcoin mining company mined 2115 BTC in the first quarter of 2023, a 50.5% increase from last year. The Riot group announced that the Rhodium miners failed to pay for the hosting fees and related service charges accumulated by its Whinstone facilities.
Impact of Violation of Hosting Contract
On May 2, the Riot team filed a lawsuit against Rhodium and affiliate companies at the district court in Milam. The Riot group requested the court to assist them in recovering assets worth $26 million and extra litigation costs incurred.
Even though the court case was still in its early stage, the Riot group could not estimate the exact amount the firm would manage to recover from Rhodium. The court report revealed that the Rhodium team presented inaccurate figures for the hosting fees it owns Riot.
Initially, Riot and Rhodium agreed to share the revenue generated at the Whinstone facilities. It was reported that the Rhodium team failed to honor the agreement for the Whinstone facilities, which garnered over $26 million from 2021 to 2023.
Commenting on the allegation, the Whinstone team stated that the Rhodium group disrupted the efforts to collect the revenue from the facility in May 2022 and April 5. The Whinstone team disclosed that despite efforts to generate measurable gains, the Rhodium team failed to pay Riot their share.
In a separate writing, the Riot team accused Rhodium of using its power credits for roughly two years without permission. In 2020, Riot and Rhodium team entered a partnership agreement on utilizing power credits.
Review of Riot Court Filing
Afterward, it was reported that some of the Riots’ power credits expired. In the court filing, the Riot group urged the court to terminate existing hosting agreements with Rhodium.
The Riot team also requested the court to be exempted from repaying any outstanding balances of power credits after the termination of the contract.
In a previous statement, Rhodium requested Whinstone to clarify whether the company owned power credits not associated with the expired contract.
The Rhodium October report reveals that the Whinstone team failed to respond to the Rhodium but urged the court to declare that it did not owe any company power credits.
According to the court report, power credits are issued to Bitcoin miners to limit energy consumption. Despite the high energy consumption in Bitcoin mining, the Riot team lamented that a decline in BTC prices and macroeconomic pressure adversely affected mining activities.