In Rockdale, TX, a 125MW Bitcoin mining operation run by Rhodium Enterprises experienced an abrupt halt. Whinstone Inc., the site operator and a Riot Platforms subsidiary, deployed armed security last week to cease its activities.
The Legal Dispute: Origins and Developments
The conflict began on May 2, 2023, with Whinstone US, Inc. suing Rhodium for alleged unpaid hosting fees and seeking a declaration to end hosting and energy agreements. Rhodium’s defense included countering with its claims and a motion for arbitration, which the court granted.
Details of the Power Agreements
July 2020 marked the signing of several power agreements, crucial in this dispute. These contracts, pre-dating the energy price inflation of subsequent years, were intended to lock in electricity costs at a fixed rate for a decade.
Riot Platforms’ Acquisition and Financial Implications
Riot Platforms, previously Riot Blockchain, acquired Whinstone in 2021, inheriting these power agreements. However, their recent financial statements refer to these as “legacy contracts,” indicating struggles in managing them profitably.
Rhodium alleges Whinstone owes millions in unshared profits from energy sales to the ERCOT market. Moreover, Whinstone’s past dealings, including a similar dispute with Japan’s GMO, highlight a pattern of controversial actions.
The GMO Dispute: Another Legal Challenge for Whinstone
GMO’s legal battle with Whinstone, seeking damages nearing $650 million, adds to the complexity of Whinstone’s legal entanglements, further stressing its operational challenges.
Following the appellate court’s rejection of Whinstone’s plea, they escalated the situation by shutting off power to Rhodium’s facilities. Rhodium swiftly responded with a motion for a temporary restraining order, which was granted.
Awaiting the Court’s Decision: Future Implications
With a crucial hearing scheduled, the industry awaits the outcome that will shape not only the fate of these companies but potentially the operational dynamics of Bitcoin mining in Texas.
