Riot Platforms, formerly known as Riot Blockchain, has taken legal measures against Rhodium Enterprises, a Bitcoin mining company based in Texas.
The move aims to reclaim an alleged sum of “over $26 million” in unpaid fees for utilizing Whinstone’s Bitcoin mining facilities, which is a subsidiary owned entirely by Riot.
As per Riot Platform’s financial report for the first quarter of 2023, released on May 10, Rhodium Enterprises purportedly violated its agreement with Riot by neglecting to remit the hosting and service fees associated with the aforementioned mining facilities.
To address this issue, Riot filed a petition on May 2 in the District Court of Milam County, Texas.
The petition seeks not only the recovery of the outstanding amount exceeding $26 million but also reimbursement for the legal expenses incurred throughout the legal proceedings.
Furthermore, Riot has requested the termination of specific hosting agreements and has put forth a proposal asserting its exemption from repaying any outstanding power credits owed to Rhodium.
At this stage, the certainty of recovering the unpaid fees remains uncertain, as acknowledged by the involved parties.
“Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.”
According to the report, Rhodium Enterprises received the legal notice on May 8 and is expected to respond by May 30, indicating a deadline set for their response.
In the meantime, Riot announced that it successfully mined “2,115 Bitcoins” during the first quarter of 2023, representing a notable increase of 50.5% compared to the same period in 2022.
Riot also clarified its lack of affiliation with banks that have recently faced collapses. In their statement, they emphasized, “We did not have any banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank, and currently hold our cash and cash equivalents at multiple banking institutions.”
Looking ahead, Riot anticipates ongoing challenges for crypto mining companies throughout 2023, primarily due to the significant decline in Bitcoin’s price and the impact of various national and global macroeconomic factors.
However, Riot believes that its relative position within the industry, along with its liquidity and absence of long-term debt, positions the company favorably to benefit from potential industry consolidation.