Bitmain Sues JWKJ for $15 Million in Bitcoin Mining Dispute
Bitcoin mining and hardware manufacturing giant Bitmain has filed a lawsuit against former hosting partner JWKJ Technologies, alleging the unlawful detention of $15 million worth of its bitcoin miners in a breach-of-contract case.
Bitmain submitted the legal complaint to a U.S. federal court in Missouri on July 8, detailing the deterioration of its partnership with JWKJ Technologies earlier this year. The lawsuit provides additional insights into Bitmain’s proprietary bitcoin mining operations, which utilized excess inventory of its S19XP equipment following the 2022 bear market.
According to the complaint, Bitmain entered into a hosting agreement with JWKJ in 2023 to colocate 6,000 units of its Antminer S19XPs at JWKJ’s facility in St. Louis, Missouri, at a hosting fee of $0.073 per kWh. This transaction aligned with TheEnergyMag’s report of a sharp increase in Bitmain’s import of S19XPs from its factory partners in Asia to its U.S. subsidiary last year.
The service agreement, attached to the complaint, required JWKJ to maintain at least 95% uptime for the miners. JWKJ, a foreign limited liability company registered in Missouri with a director named Jiawei Zhang, allegedly failed to meet this requirement starting in February by not providing stable electric power and internet access, thus violating the contract.
Furthermore, on June 16, JWKJ allegedly manipulated the miners to redirect their computational power to a mining pool benefiting JWKJ, instead of the designated pool specified by Bitmain. This redirection reportedly resulted in JWKJ obtaining over 5.59 bitcoin, worth approximately $356,882 at that time.
In response, Bitmain terminated the hosting agreement and demanded the return of its equipment. However, JWKJ allegedly refused to allow Bitmain personnel to access the site to retrieve the miners and continued to mine bitcoin for its own gain.
This is not the first hosting-related legal case that involved Bitmain as the company began scaling up its proprietary mining business in the U.S. in 2023. Bison Blockchain named Bitmain as an additional defendant in a case last year against MineOne.