Rhodium Was Accused Of Owing $26 Million In Hosting Fees

Key Points:

• Whinstone US, a subsidiary of cryptocurrency miner Riot, claims Rhodium owes it $26 million in hosting costs.
• Riot originally made the charges public in its first-quarter earnings release.
• Riot argues that Rhodium purposefully underestimated the amount of hosting costs it had to pay for Riot’s hosting services.

Whinstone US, a subsidiary of Bitcoin miner Riot Platforms, is suing another miner, Rhodium Enterprises, alleging that it is owed $26 million in hosting charges and demanding that a local court decided that it does not owe the defendant any demand response program credits.

Rhodium Enterprises reportedly broke its contract with Riot by failing to pay hosting and service costs related to the usage of Whinstone’s Bitcoin mining facilities, a fully owned subsidiary of Riot, according to Riot Platform’s Q1 2023 financial report issued on May 10.

On May 2, Riot filed a legal case for breach of contract with the district court of Milam County in Texas, naming four of Rhodium’s subsidiaries as defendants.

Riot says that Rhodium intentionally overestimated how much it had to pay in hosting costs for Riot’s services. The two were intended to split the net income from Rhodium’s mining at the Whinstone facilities, according to the complaint, which also claimed that the company’s businesses cheated Whinstone out of $26 million between 2021 and the first quarter of 2023.

Moreover, Riot claims that Rhodium’s troops amassed power credits on their books that they did not possess for two years. Riot also wants the court to determine that it owes no power credits to Rhodium. Riot argues that past contracts may have provided a legal framework for the power credits, but that they have been replaced by the December 2020 agreements.

Whinstone alleges it attempted to collect the payments in May 2022 and on April 5, but the Rhodium businesses refused or did not pay, prompting the complaint. According to the article, the corporation was served on May 8 and had until May 30 to react.

Likewise, Riot said that it mined 2,115 Bitcoins in Q1 2023, a 50.5% increase over Q1 2022. It expects crypto mining companies will face new hurdles in 2023 as a result of the severe price decrease of Bitcoin and other national and global macroeconomic variables.

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Harold

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