London-based Faes & Company filed a complaint against crypto mining firm Blockware Solutions LLC on Dec. 17, claiming it misrepresented the performance capability of its miners and lacked adequate power access to keep the machines running.
Plaintiffs allege losses of $250,000 and are seeking compensatory and punitive damages.
According to the complaint, the parties entered into contracts in October 2021 for Faes to buy $525,000 worth of Bitcoin miners and related hosting services. As part of the agreement, Blockware would host Faes’ miners at one of its server facilities, which it allegedly owns and operates for a monthly hosting fee and energy costs.
Related: Public Bitcoin mining companies plagued with $4B of collective debt
The plaintiff alleges that at the time of the agreement, however, Blockware “did not actually own or operate a facility to host the miners and was not capable of doing so reliably.” It also noted:
“Further, to the extent Blockware had access to third-party facilities to host and manage the miners, the facilities lacked reliable power (likely due to a limiting contractual arrangement with their energy supplier), so the operation of the miners was and is regularly subject to interruption or “curtailment.” As a result, Faes’ miners under Blockware’s management and control have experienced prolonged downtime and inoperability due to lack of power, resulting in significant loss of revenue.”
Faes also noted in the complaint that ordered the machines to be delivered and hosted in Blockware’s facilities in January, when a Bitcoin (BTC) was worth over $45,000. The rigs, however, only came online in April. The suit also noted that:
“Problems with downtime began approximately two days after Faes’ miners first came online and have persisted throughout 2022, resulting in numerous complaints and support tickets by Faes. Despite these problems, Blockware hosts and updates a public “status page” that shows persistent high uptime at its facilities, including the Pennsylvania facility where Faes’ miners have been hosted, showing consistent 100% uptime for the preceding 90 days.”
Despite the displayed “100% uptime”, a look at the incident history shows “approximately 50 days of extended power curtailment” at the Pennsylvania facility during September and October, noted the complaint.
Blockware Solutions did not immediately respond to Cointelegraphs’ requests for comments.
Bitcoin mining companies had been hit hard by the crypto winter and a spike in energy costs. Approximately $2.6 billion is owed cumulatively by just the top 10 Bitcoin mining debtors, according to Hashrate Index.
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