In a lawsuit, a customer accused Blockware Solutions of breach of contract, fraud, unfair trade policies, and theft. The lawsuit, filed on December 17 in U.S. District Court for the Northern District of Illinois, focuses on a charge that Blockware sold Faes & Co. 50 mining rigs for $525,000.
Per the Faes, Blockware does not own or run a facility to house mining equipment and does not have the ability to do so regularly.
A client claims Blockware Solutions, a provider of Bitcoin mining hardware and hosting, for breach of contract, irresponsibility, dishonest business methods, and fraud.
London-based Faes stated that it ordered the machines to be supplied and housed at Blockware’s own facilities in January. When bitcoin mining was very profitable during a bull market. According to Faes, the rigs were only operational in April. As per Faes, the machines had an average uptime of 70% in October, rather than the claimed 100%.
In his statement, Faes stated:
Blockware did not actually own or operate a facility to host the miners and could not do so reliably. As a result, Faes’ miners under Blockware’s management and control have experienced prolonged downtime and inoperability due to a lack of power, resulting in a significant loss of revenue.
Faes said operational troubles began as soon as the machines were turned on and finally became “nonoperational” in October. Faes claimed to have suffered at least $250,000 in losses.
Before the machines went offline, Blockware claimed 100% uptime on a 90-day status page, even for a site in Pennsylvania, where Faes’ rigs were frequently not running, based on the complaint.
Mason Japp, CEO of Blockware, stated:
We disagree with all statements and claims” in the lawsuit, “We are confident it will be tossed out from the court, we have honestly served this industry for over 5.5 years, and this has been [the] first filed lawsuit against us.
Tough Year For Mining Firms
Blockware is at least the second retail-facing mining business to be accused of operational issues this year. Compass Mining’s CEO and CFO quit in July after a series of “setbacks and disappointments,”. Furthermore, including delays in machine deployment and several thousand rigs trapped in Russia due to sanctions on its hosting partner.
Based in Austin, Texas, Core Scientific claimed its bankruptcy on falling bitcoin prices and increased energy costs for bitcoin mining. Moreover, and a $7 million outstanding debt from Celsius Network, one of its largest clients in the United States.
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The most significant hit came when major cryptocurrency exchange FTX went bankrupt last month. Its rapid collapse has sparked careful and critical analysis of how cryptocurrency businesses keep assets and conduct business operations.
After a continued increase in 2020 and 2021, bitcoin, the most popular digital currency by far, is down more than 60% this year, putting pressure on the crypto-mining industry.
Processing bitcoin transactions and “mining” new coins are carried out by powerful computers linked to a worldwide network, competing to solve complicated mathematical challenges.