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 sued 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.
Whinstone’s problematic partner
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.
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.
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 purchased by Riot Platforms in May 2021, does not specify the amount of damages it seeks, but stated:
“Pursuant to Texas Rule of Civil Procedure 47, Whinstone US seeks monetary relief of more than $1,000,000.00. The requested monetary relief will likely increase after discovery is completed.”
Whinstone, Rhodium clashed in the past
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 overturned.
