SBI Crypto, a subsidiary of Japanese financial services firm SBI Holdings, has filed a lawsuit against a data center owned by Riot Blockchain. SBI Crypto alleges that the data center engaged in fraudulent behavior and negligence, resulting in damages worth tens of millions of dollars. The lawsuit seeks to hold the data center and its staff accountable for the losses and demand compensation. Riot Blockchain has not yet responded to the lawsuit.
Bitcoin miner SBI Crypto Co. (SBIC) is taking legal action against data center Whinstone US, based in Rockdale, Texas, for allegedly misrepresenting its readiness to host a large-scale mining operation. SBI Crypto claims that as a result of Whinstone’s delays and substandard conditions, millions of dollars in damages were incurred. The lawsuit, filed with the United States District Court for the Western District of Texas, Waco Division, accuses Whinstone of “fraud, fraudulent inducement of contract, fraud by nondisclosure, negligent bailment, and breach of the Hosting Service Agreement.”
In May 2021, Riot Blockchain acquired Whinstone US for $11.8 million in common stock and $80 million in cash. The misrepresentations include claims that Whinstone did not conform to industry standards, failed to fulfill its promise to deliver 20,000 mining machines to the site, and did not provide adequate dust filters for SBIC’s equipment. SBIC signed with Whinstone in late October 2019, and the lack of documentation later turned out to be a stumbling block when it came to light that the facility required documentation to turn on the power.
The state of Texas has always been one of the most welcoming regions in the world for miners to set up shop, in part due to an abundance of renewable energy and the ability of miners to reduce their consumption when the grid is experiencing peak levels of demand. However, a bill tabled in March seeks to limit incentives to Bitcoin miners whose power consumption scales up and down in line with the grid’s requirements. The bill, Texas Senate Bill 1751, passed unanimously in a state Senate committee vote and awaits federal Senate approval before heading to Texas’ House of Representatives and Governor Greg Abbott’s desk.
Texas Blockchain Council President Lee Bratcher thinks the bill can pass Senate, but not the House. Local miners should still be concerned by these legislative developments, he said in an email. “SB-1751 is a concerted effort by established industry groups in the ERCOT marketplace to tilt the playing field in their favor because they cannot compete with Bitcoin miners when it comes to load flexibility.”
In conclusion, SBI Crypto Co. is suing the data center Whinstone US for allegedly misrepresenting its readiness to host a large-scale mining operation, and Texas is currently facing legislation that seeks to limit incentives to Bitcoin miners whose power consumption scales up and down in line with the grid’s requirements.