Cryptocurrency mining and Bitcoin mining in particular, have become increasingly popular in Texas due to the abundance of renewable energy and preferential rates from power companies. Further incentivizing miners, Texas Senate Bill 1751 which proposes to regulate the alternative use of electricity by miners to cut their consumption when grid demand is high, has passed unanimously in a Senate committee vote. While the bill still awaits approval from the federal Senate, Bitcoin miners should be aware of the possibility of the bill's passing and its potential implications.

SBI Crypto Co., (SBIC), a Bitcoin miner, recently sued Whinstone US, a data center based in Rockdale, Texas, for misrepresenting its readiness to host a large-scale mining operation. In the lawsuit, SBI Crypto is charging the data center with “fraud, fraudulent inducement of contract, fraud by nondisclosure, negligent bailment, and breach of the Hosting Service Agreement” due to Whinstone’s failure to provide documents needed to turn on the power and the hosting services that it has promised. SBI Crypto is also seeking damages totalling millions of dollars.

In May 2021, Whinstone was purchased by Riot Blockchain in equity and cash. Notably, in the agreement between SBI Crypto and Whinstone, the data center had allegedly promised to deliver 20,000 mining machines to the site by September 2020, however only 16,200 were installed. Upon inspection, it was noticed that the machines lacked dust filters and SBIC representative observed “high levels of dust and corrosion build-up.”

Unfortunately, SBI Crypto’s case is not the only instance of deception in the mining sector recently as miners must be vigilant to ensure that they have made the safest decision for their operation. Despite this, miners are likely to remain optimistic about the opportunity in the state of Texas due to the many favorable conditions for mining there.



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