Whinstone US, a unit of bitcoin mining firm Riot Platforms (RIOT), is suing another miner – Rhodium Enterprises – alleging it is owed $26 million in hosting fees and asking a local court to declare that it doesn't owe any credits related to demand response programs to the defendant.

Riot first disclosed its allegations in its first-quarter earnings report yesterday and according to a petition obtained by CoinDesk, Riot's participation in demand response programs, under which bitcoin miners get power credits to limit their energy consumption, is the key reason that led to the lawsuit. The civil case for breach of contract was filed by Riot with the district court of Milam County in Texas on May 2 and four of Rhodium's subsidiaries as defendants.

Riot claims that Rhodium "deliberately miscalculated" how much in hosting fees it had to pay for Riot's hosting services. The two were supposed to share the net revenue from Rhodium's mining at the Whinstone facilities, said the lawsuit, which further alleged that the Rhodium entities short-changed Whinstone for $26 million from 2021 to the first quarter of 2023.

Whinstone claims it tried to collect the payments in May 2022 and on April 5, but the Rhodium entities have refused or failed to pay, leading to the lawsuit.

Separately, Riot claims that Rhodium's units were amassing power credits on their books for two years that it didn't have rights to. Riot also wants the court to declare that Riot doesn't owe Rhodium any power credits. Riot claims that those power credits could have had a legal basis from previous contracts, but those were superseded by the December 2020 agreements.

In October 2022, the Rhodium entities asked Whinstone to "verify" that they were "owed" power credits that were unrelated to the expired contracts. Whinstone rejected the request and asked the court to declare it doesn't owe any such credits to Rhodium.

Riot confirmed the lawsuit but did not provide comment. Rhodium declined a request by CoinDesk for comment.

UPDATE (May 12, 2023, 22:30 UTC): Updates last paragraph.

RIOT Riot Blockchain Mining Bitcoin Mining Rhodium Enterprises Lawsuit lawsuits Texas

Eliza Gkritsi

Eliza Gkritsi is a CoinDesk contributor focused on the intersection of crypto and AI, having previously covered mining for two years. She previously worked at TechNode in Shanghai and has graduated from the London School of Economics, Fudan University, and the University of York. She owns 25 WLD. She tweets as @egreechee.