Riot Platforms, Inc., a Bitcoin mining company, has announced in a press release that it has entered into a non-binding term sheet outlining the potential acquisition of specific assets owned by bankrupt Rhodium Encore LLC through its subsidiary, Whinstone US, Inc.
Upon successful completion of the transaction, Whinstone will pay a total of $180 million to Rhodium. This amount will be divided into $129.9 million in cash, a return of Rhodium’s power security deposit, and $49 million in Riot Platforms shares.Â
In exchange, Rhodium will transfer ownership of all tangible properties at the Rockdale Facility, including all ASIC miners, and vacate the property within three business days after the transaction.
Riot Platforms is expected to assume ownership of Rhodium’s 125 MW of power capacity and the existing operating assets at the Rockdale facility, resulting in the entire Rockdale facility power load being allocated to self-use.Â
Additionally, all existing litigation between Whinstone and Rhodium will be dismissed upon the successful completion of the transaction.Â
On August 24, 2024, Rhodium filed for Chapter 11 bankruptcy in the United States after amassing up to $100 million in liabilities. Filing bankruptcy enabled the company to restructure its debts while continuing to operate.Â
A few days after filing for bankruptcy, the company got court authorization to receive a loan of $30 million in USD or 500 BTC from Galaxy Digital.Â
Riot Platforms has a rocky relationship with Rhodium Â
In 2023, Riot Platforms and Rhodium were involved in legal disputes over unpaid fees and power credits. Riot Platforms sued Rhodium for allegedly owing $26 million in hosting fees, a service provided by Whinstone.Â
Rhodium, on the other hand, claimed that it had power credits with Whinstone, a claim with which Riot disagreed. According to Riot Platforms, Rhodium had been amassing power credit without its knowledge, adding that their previous contract was superseded.Â
The tussle for power charges isn’t unrelated to Riot Platforms and Rhodium’s participation in power demand response programs, which occurs in the case of severe power outages or increased demand for power.
Bitcoin miners such as Riot and Rhodium consume a lot of power due to the mining activity and diverting some of that power led to a reduction in mining activities, to which they get power credits to make up for their troubles.Â
In October 2022, Rhodium contacted Riot to confirm that they were owed power credits, a request that Whinstone rejected. It also asked the court to declare that it doesn’t owe Rhodium any credit in its lawsuits, claiming that those contracts had been superseded.Â
In December 2024, Rhodium received a favorable ruling, confirming that none of Rhodium’s contracts had been superseded or terminated. This enabled the miner to continue operations at the Whintsone facility.Â
However, Rhodium’s Co-CEO, Nathan Nicols, resigned after a group of investors sued him and his cofounders over alleged mining fraud.Â
Sales and acquisitions of Bitcoin mining assetsÂ
Since filing for bankruptcy, Rhodium has sold its Temple Green Data LLC for $40.6 million in cash and this potential sale will be part of the process to settle its debt.Â
Riot’s potential acquisition of specific portions of Rhodium’s assets isn’t novel in the crypto mining space, with Canadian Bitcoin mining firm Bitfarms completing the acquisition of Stronghold Digital Mining (SDIG).Â
Riot itself isn’t new to acquiring Bitcoin mining companies, given its acquisition of its competitor, Block Mining, in 2024.Â
Riot’s press release mentioned that the transaction and settlement will be subject to, among other things, the approval of the Bankruptcy Court according to the Bankruptcy Rule 9019 and Bankruptcy Code section 363. It will also require the execution of definitive agreements between Whinstone and Rhodium.
Riot said that it will provide more information in due course.
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