Riot Platforms to Acquire Rhodium Assets for $185M, Resolve Legal Disputes

Riot Platforms, a leading Bitcoin mining company, has entered into a non-binding term sheet for the potential acquisition of specific assets owned by Rhodium Encore LLC, which is currently undergoing bankruptcy proceedings. The proposed transaction, valued at $185 million, involves a combination of cash, the return of a power security deposit, and Riot shares. This strategic move aims to enhance Riot's operational capabilities and resolve past legal conflicts between the two companies.

Whinstone US, Inc., a subsidiary of Riot Platforms, will pay a total of $180 million to Rhodium. This amount is broken down into $129.9 million in cash, the return of Rhodium’s power security deposit, and $49 million in Riot Platforms shares. In return, 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. This transfer will allow Riot Platforms 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.

The acquisition also includes the dismissal of all existing litigation between Whinstone and Rhodium upon the successful completion of the transaction. This move is part of a broader trend in the Bitcoin mining industry, where firms are acquiring struggling competitors to expand their operations and market share. This trend is similar to Bitfarms’ recent purchase of Stronghold Digital Mining.

Riot Platforms and Rhodium have had a contentious relationship in the past. In 2023, the two companies 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. 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Riot Platforms, Rhodium had been amassing power credit without its knowledge, adding that their previous contract was superseded. The dispute over power charges is related to the companies' participation in power demand response programs, which occur in cases of severe power outages or increased demand for power. Bitcoin miners such as Riot and Rhodium consume a lot of power due to mining activities, and diverting some of that power led to a reduction in mining activities, for which they received power credits to make up for their troubles.

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. 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 Whinstone facility. However, Rhodium’s Co-CEO, Nathan Nicols, resigned after a group of investors sued him and his cofounders over alleged mining fraud.

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. Riot’s potential acquisition of specific portions of Rhodium’s assets is not novel in the crypto mining space, with Canadian Bitcoin mining firm Bitfarms completing the acquisition of Stronghold Digital Mining. Riot itself isn’t new to acquiring Bitcoin mining companies, given its acquisition of its competitor, Block Mining, in 2024.

The transaction and settlement will be subject to 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 has stated that it will provide more information in due course. This acquisition is a strategic move by Riot Platforms to expand its operations and resolve past disputes, positioning itself as a key player in the Bitcoin mining industry.