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Crypto miner Whinstone US has sued its private equity partners in a joint mining venture after their deal at the largest mining facility in the United States fell apart. This is the latest volley in a troubled relationship that has already featured lawsuits and actions by armed security forces.
Whinstone US has <a href="https://www.law.com/texaslawyer/2024/07/23/largest-crypto-hosting-facility-sues-texas-bitcoin-mining-operation/" target="_blank" rel="noopener nofollow">sued</a> three companies and their executives, accusing them of fraud, conspiracy and securities violations for diluting its revenue from a joint venture that mines Bitcoin at the Rockdale, Texas facility. The suit was filed in the Tarrant County 153rd District in Texas.
<h2 id="whinstone-s-problematic-partner">Whinstone’s problematic partner</h2>
The joint venture (JV), called Rhodium, was originally formed in 2020, between Whinstone US and Delaware-registered Imperium. Under a series of hosting agreements, Whinstone US supplied the JV with up to 130 megawatts of power at a discounted rate, while Imperium provided infrastructure at Building C of the facility. 
Related: <a href="https://cointelegraph.com/news/bitcoin-miner-riot-platforms-hash-rate-up-50-percent-june">Bitcoin miner Riot Platforms hashrate booms 50% in June</a>
Whinstone US withdrew from the JV the same year with the agreement that it would receive “12.5% of ‘all the underlying economics’” from the mining activities in exchange for a continuing supply of discounted electricity. The power supply was worth about $2 million per month, the suit claims.
<figure>
 <img src="https://s3.cointelegraph.com/uploads/2024-07/d89163fe-c9f6-45e1-82fc-e72d643ff494.png" alt="Riot subsidiary Whinstone US sues former JV partner over revenue flow" title="">
 <figcaption style="text-align: center;">
 The Whinstone suit against Rhodium and related parties. Source: Law.com
 </figcaption>
</figure>
According to the suit, Imperium formed corporate entities that were sold to investors, diluting Whinstone US’ 12.5% share of the “underlying economics.” Further, the Imperium defendants restructured Rhodium and siphoned off revenue to support other business interests.
Whinstone US, which was <a href="https://www.globenewswire.com/en/news-release/2021/05/26/2236906/0/en/Riot-Blockchain-Completes-Acquisition-of-Whinstone-US-Creating-Leading-North-American-Bitcoin-Mining-Company.html" target="_blank" rel="noopener nofollow">purchased</a> by Riot Platforms in May 2021, does not specify the amount of damages it seeks, but stated:
<blockquote data-ct-non-breakable="true">
 “Pursuant to Texas Rule of Civil Procedure 47, Whinstone US seeks monetary relief of more&nbsp;than $1,000,000.00. The requested monetary relief will likely increase after discovery is&nbsp;completed.”
</blockquote>
<h3 id="whinstone-rhodium-clashed-in-the-past">Whinstone, Rhodium clashed in the past</h3>
The sides have met in court before. In May 2023, Riot sued Rhodium in Milam County, Texas, for $26 million in unpaid hosting and service fees. In November 2023, Whinstone US issued a Notice of Termination to Rhodium, cutting off its power supply and access to the facilities. Rhodium went to court to receive a temporary injunction against enforcing the notification, but that injunction was later <a href="https://caselaw.findlaw.com/court/tx-court-of-appeals/115989998.html" target="_blank" rel="noopener nofollow">overturned</a>.
<figure>
 <img src="https://s3.cointelegraph.com/uploads/2024-07/9f00c528-6c84-451f-a0af-bbe64d33f305.png" alt="Riot subsidiary Whinstone US sues former JV partner over revenue flow" title="">
 <figcaption style="text-align: center;">
 Source: <a href="https://x.com/Neome_com/status/1732506452701409667" target="_blank" rel="noopener nofollow">InnovatekMobile</a>
 </figcaption>
</figure>
Magazine: <a href="https://cointelegraph.com/magazine/iranian-miners-say-bad-regulations-killing-great-potential-in-industry/">Inside the Iranian Bitcoin mining industry</a>

Riot subsidiary Whinstone US sues former JV partner over revenue flow

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Cointelegraph

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