Companies engaged in the Bitcoin mining business are preparing for a legal confrontation over accusations of non-receipt payments.
According to a recent report, the Riot Platforms company would have filed a lawsuit against Rhodium Enterprises for alleged non-payment of fees. The lawsuit alleges that the firm owes a total of $26 million to the former Riot Blockchain. The latter also seeks to terminate some hosting agreements that the two Bitcoin mining companies have up to now.
This attempt to recover the funds, supposedly owed, becomes the new objective of the Riot company. This firm, in its most recent quarterly earnings report, accuses its counterpart of having broken a contract established between them. This new episode becomes the most recent that the mining industry is resorted to within the United States.
In particular, the issue between the two mining pools centers on the hosting of ASIC equipment. Riot accuses Rhodium of not paying services corresponding to fees for hosting equipment at Whinstone’s Bitcoin mining centers. The latter are made up of a subsidiary, which is wholly owned by Riot.
Bitcoin Mining Companies Will Terminate Their Hosting Contract
As already noted, the $26-million-dollar issue is reason enough to damage Riot’s trust in its partner. In this sense, the company wishes to conclude its accommodation contract with the defendant, as requested in its court case.
The company points out that the possibility of recovering the payment for the fees at this time is not entirely guaranteed. “Because this litigation is still in this early stage, we cannot reasonably estimate the probability of an unfavorable outcome or the magnitude of such an outcome, if any,” Riot said.
In this conflict between Bitcoin mining companies, Rhodium has until May 30 to answer for Riot’s accusations. This company ensures that the non-payment of taxes by the defendant has had a significant impact on its income, as well as its growth prospects.
Riot’s Impressive Growth on the Stock Market
Although Riot affirms that Rhodium’s non-payment of commissions significantly affects its business prospects, the results do not seem to be expressed in its financial health. In this way, the aforementioned earnings report for the first quarter of 2023, published in May, shows a solid company on its foundations.
In that report, Riot Platforms posted revenue of $73.24 million for the first three-month tranche that ended in March of this year. Consequently, the results beat the Zacks Consensus Estimate, which pointed to a quarterly loss of $0.17 per share. Contrary to this, the company reported a $0.04 earnings per share (EPS).
It’s worth mentioning that the company has beaten consensus earnings per share twice over the past four quarters. Likewise, its shares have grown no less than 237.5% since the beginning of 2023, according to data from Yahoo Finance.
Given these facts, the company presents itself as one of the favorites among investors in the cryptocurrency sector linked to mining. Currently, the company is focused on expanding operations by increasing its hashrate capacity in its infrastructures.
It is important to note that the company reported a new all-time high in its computing power. Thus, it would have reached 10.5 EH/s during the first quarter of this year.
By Audy Castaneda
