Whinstone US, a subsidiary of bitcoin mining firm Riot Platforms (RIOT), recently filed a lawsuit against another mining company, Rhodium Enterprises, accusing them of owing $26 million in hosting fees. The main point of contention between the two parties stems from Riot’s involvement in demand response programs, under which bitcoin miners receive power credits to limit their energy consumption.
Demand response programs are designed to ease the strain on power grids during periods of high demand by encouraging energy users to cut their consumption, in exchange for credits or other financial incentives. However, Riot alleges that Rhodium “deliberately miscalculated” how much it owed for Riot’s hosting services, and that the two companies were meant to share the net revenue from Rhodium’s mining at Whinstone facilities.
The lawsuit goes on to claim that Whinstone was short-changed by $26 million from 2021 to the first quarter of 2023. Whinstone attempted to collect these payments in May 2022 and on April 5th, but Rhodium’s subsidiaries have reportedly refused or failed to pay, leading to the current legal action.
Adding another layer to this complex case, Riot asserts that Rhodium’s units had been accumulating power credits on their books for two years that they weren’t entitled to. Riot is now seeking a court declaration stating that it doesn’t owe Rhodium any power credits. According to Riot, these credits might have been legally valid under previous agreements, but were overridden by contracts signed in December 2020.
In October 2022, Rhodium’s subsidiaries approached Whinstone to verify that they were owed power credits unrelated to the expired contracts. Whinstone rejected this request, and is now asking the court to declare that it doesn’t owe any such credits to Rhodium.
While Riot has confirmed the existence of the lawsuit, they have not provided any further comment on the matter. At the time of publication, Rhodium could not be reached for a statement.
This legal battle raises questions about the transparency and accuracy of energy consumption calculations in the cryptocurrency mining industry. In an age where environmental concerns are paramount, ensuring that mining operations are held accountable for their energy usage is essential. As the case unfolds, it could potentially set a precedent for future disputes in the industry, with outcomes potentially impacting energy-conscious policies across the sector.
The reliable reporting of energy consumption figures is not only vital for adhering to regulations but also for companies’ reputations as they navigate the evolving world of cryptocurrency and digital assets. As this case proceeds, it serves as a reminder of the importance of maintaining openness and honesty in the rapidly expanding blockchain landscape.
Source: Coindesk
