• The Chinese Supreme Court has ruled in favor of Genesis Mining in the case of 485,000 GPU crypto miners

  • The Supreme People’s Court of China has sided with Genesis Mining in its claim to roughly 500,000 graphics cards used to mine cryptocurrency, which has been the subject of a legal dispute since 2018.

    The orders, issued on June 23 and made public on July 29, shed light on the intricacies of a disagreement involving a considerable amount of hashing power by one of the world’s largest crypto mining companies yet remained mostly undetected throughout the years.

    According to the court rulings, the graphic processor units (GPUs) ordered to be returned to Genesis Mining include 485,681 Micro-Star International RX470 8GB cards. “The devices in this case are still operational and in a [good] condition to be returned,” the court noted.

    On the Ethash algorithm, the theoretical hashing capacity of the GPU stockpile can reach 14 TH/s. Based on Ethereum’s current difficulty and a projected $0.06 per kWh energy cost, they could make over $1 million in gross revenues every day if devoted to mining.

    According to eBay secondhand market quotes, a used RX470 8GB card might sell for roughly $500, implying that the half-million GPUs could be valued up to $200 million.

    “We are glad to see the court side in our favor after numerous years of litigation,” said Marco Streng, CEO and co-founder of Genesis Mining and Genesis Digital Assets.

    It appears that China’s recent crackdown on cryptocurrency mining also played a role in Genesis Mining’s court success. In its verdict, the Supreme Court said that the decision is consistent with China’s overarching objective of suppressing energy-intensive crypto mining activities.

    However, Streng declined to comment on the present status of the equipment or whether it is in travel to Genesis Mining’s facilities.

    The hosting partnership failed.

    Streng and Marco Krohn started Genesis Mining in 2013 as a cloud mining company with facilities in Iceland, providing their hash rate to global customers. Streng and Krohn founded a self-mining company in 2017 with additional partners Abdumalik Mirakhmedov, Andrey Kim, and Rashit Makhat.

    That self-mining company didn’t have a name at first, and it wasn’t until earlier this year that the five partners formally debuted it as Genesis Digital Assets. This occurred when the company sought finance, eventually closing a $125 million round. According to its website, the self-mining organization has 143 megawatts of power and a total bitcoin hashrate of more than 2.6 EH/s as of July 31.

    Around the time Streng and Krohn went into the self-mining sector, they also signed a hosting agreement for Genesis Mining with Chuangshiji Technology Limited, a Chinese data center provider in Fuzhou, Jiangxi province.

    According to the Supreme Court’s account of the facts, Chuangshiji abruptly ceased payments to its hosting client beginning in September 2018 due to allegations that Genesis Mining failed to pay its electricity costs.

    In May 2019, Genesis Mining filed a lawsuit in Fuzhou Municipal Intermediate People’s Court demanding the restoration of 560,000 units of its GPUs and 60,580 units of AntMiner S9 bitcoin ASIC miners. The company accused Chuangshiji of failing to meet its responsibilities and stealing from the miners. Genesis Mining stated that it had decided to end the hosting connection, but Chuangshi refused to return the miners and began selling some of the equipment.

    The matter was tried in the Fuzhou Intermedia Court, and Chuangshiji appealed to the Jiangxi Provincial Higher People’s Court, which handed down its decision in 2020.

    Chuangshiji was ordered by the higher provincial court to refund 100,000 GPUs to Genesis Mining’s mainland Chinese subsidiary and 385,681 GPUs to Genesis Mining’s Hong Kong entity.

    However, Chuangshiji petitioned the Supreme People’s Court with what it claimed was new evidence, requesting that the case be reviewed by China’s highest court.

    Earlier this year, the Supreme Court refused the review petition and concurred with the Jiangxi Higher People’s Court.

    According to the Supreme Court, Chuangshiji failed to present any fresh evidence to support its allegation that its connection with Genesis Mining constituted an equity- and profit-sharing joint venture. Rather, the court saw it as a contractual business connection.

    As a result, the court ruled that both Genesis Mining and Chuangshiji should have the ability to end their connection at any time. According to the judgement, Genesis Mining had the right to demand the return of its equipment that was still operational and in excellent physical condition after the termination.

    “The operation of the Fuzhou data center, as well as the hosting and maintenance of the equipment involved in this case, is fundamentally an activity of using high-performance computers to earn virtual currency rewards.” It is an energy-intensive sector that the government discourages. As a result, the Jiangxi High Court’s decision to terminate the business connection is consistent with the State’s revised strategy for the industry at issue in this case,” the Supreme Court noted.

    Chuangshiji was unable to be reached for comment.

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