Cryptomining company wins court case over dispute for 485,000 graphics cards

[Spotty]

Summary

One of the world's largest cryptocurrency mining companies Genesis Mining has recently won a court case in China started in 2019 for the return of 485,681 AMD RX 470 8GB graphics cards and 60,580 Antminer S9's from their hosting partner after a payment dispute. The court case was brought about in 2019 after their hosting partner Chuangshiji Technology Limited suspended operation and refused to return the cards & Antminers after claiming Genesis Mining failed to pay their power bill. After an initial verdict in 2020 Chuangshiiji Technology Limited appealed the decision but in July 2021 the appeal was denied and the court ordered the return of the cards and antminers.

 

Quotes

Quote

The Block reported that China’s Supreme Court has ordered the return of 485,681 AMD Radeon RX  470 8GB graphics cards to Genesis Mining, which calls itself the "largest cloud Bitcoin mining company," following a legal dispute with its former hosting provider.

Genesis Mining filed its lawsuit in 2019 after the hosting provider, Chuangshiji Technology Limited, allegedly refused to return the graphics cards, as well as 60,580 AntMiner S9 mining rigs, after the companies had a payment-related spat in 2018.

^{Source: Tom's Hardware}

 

Quote

The Supreme People's Court of China has sided with Genesis Mining over its claim of nearly half a million graphics cards used to mine cryptocurrency that have been at the center of a legal dispute since 2018.

 

The rulings, made on June 23 and disclosed on July 29, shed light on the details of a dispute that involved a significant amount of hashing power by one of the world’s largest crypto mining operations but went largely unnoticed over the years. 

 

Based on the court judgements, the graphic processor units (GPUs) that are ordered to be returned to Genesis Mining consist of 485,681 RX470 8GB cards made by Micro-Star International. “The devices involved in this case are still in an operating capacity and are in a [good] condition to be returned,” the court added.

 

The theoretical hashing power of the GPU stockpile can total to 14 TH/s on the Ethash algorithm. If devoted to Ethereum mining, they could generate nearly $1 million in gross profits every day based on Ethereum's current difficulty at an assumed $0.06 per kWh energy cost.

Quote

Around the time when Streng and Krohn expanded into the self-mining business, they also entered into a hosting deal for Genesis Mining with a Chinese data center provider in the city of Fuzhou, Jiangxi province, called Chuangshiji Technology Limited. 

 

Per the Supreme Court’s description of the events, Chuangshiji abruptly suspended the payouts to its hosting client starting in September 2018 based on accusations that Genesis Mining failed to pay its power bills.

 

Genesis Mining filed a lawsuit in May 2019 to the Fuzhou Municipal Intermediate People's Court demanding the return of 560,000 units of its GPUs as well as 60,580 units of the AntMiner S9 bitcoin ASIC miners. The firm accused Chuangshiji of failing at its obligations and embezzling the miners. Genesis Mining said it had decided to terminate the hosting relationship but Chuangshi refused to return the miners while starting to sell some of the equipment.

^{Source: The Block}

 

 

My thoughts

The question on everyone's lips is with China's recent crackdown on cryptocurrency mining does this mean that there will be a flood of cheap RX 470 8GB graphics cards hitting the market?... Well, unfortunately probably not. Genesis Mining also has operations in other countries including Iceland and Sweden. Genesis Mining hasn't disclosed what they will do with the cards but I imagine they would just ship them to one of their other locations where they can continue to use them for mining.

 

 

Sources

https://www.tomshardware.com/news/china-supreme-court-sides-genesis-mining-gpu-battle

https://www.theblockcrypto.com/post/115788/china-supreme-court-genesis-mining-gpu-crypto-miner (The court case rulings are included)

[Levent]

I cannot even imagine the size of the half a million graphics card mining operation. Holy shit.

[Spotty]

6 minutes ago, Levent said:

I cannot even imagine the size of the half a million graphics card mining operation. Holy shit.

Yeah, it's actually crazy to think of...

Quote

If devoted to Ethereum mining, they could generate nearly $1 million in gross profits every day based on Ethereum's current difficulty at an assumed $0.06 per kWh energy cost.

 

That's also just one location they had. They also have sites in Sweden and Iceland listed on their website. If those sites are of similar scale to this one they had in China then it's a massive operation. With numbers like that when they claim they're one of the largest cryptomining operations they're probably not lying.

[Freakwise]

A not so fun (also kinda useless) fact: A used antminer s9 on ebay is around $600 and a 60,580 of them worth almost 40 million dollars 

 

 

If my rough calculation is right...

 

Edit: i type 65,800 instead of 60,580 on calculator so it's actually more close to 36 millions but that's still pretty lot

 

Edit:  the antminer draw somewhere around 1300w (if amazon and ebay listing is anything to go buy plus my assumption that it is drawing a 1300w, Which is 80% of the rated power for certain model of the s9 power supply which is 1600w)

 

Then all of them would draw some where around 78 MEGA Watts

Edited August 29, 2021 by Freakwise

[leadeater]

17 minutes ago, Freakwise said:

A not so fun (also kinda useless) fact: A used antminer s9 on ebay is around $600 and a 60,580 of them worth almost 40 million dollars 

 

 

If my rough calculation is right...

And they probably go them when they were much more expensive and only being sold to those "in the right circles".

[Spotty]

19 minutes ago, leadeater said:

And they probably go them when they were much more expensive and only being sold to those "in the right circles".

Imagine how furious they would be investing all that money in to the graphics cards and antminers only to then have them sit unused for the past 3 years. It's amazing they didn't go bankrupt as a result.

[Kilrah]

I'm almost cetain they didn't go unused, the hosting provider was just using the situation to use them to mine for themselves.

 

Pretty convenient to "seize" a monstrous money-generating machine for a bogus reason and keep it for the 2 years it's relevant while the slow justice system proceeds to prove you wrong...

[Master Disaster]

China is one weird place economically speaking. Tech investment isn't really that big of a deal over there and its fairly uncommon for one company to get that big on the back of tech alone. By far the largest investment market in China is property, its almost seen as taboo if an adult doesn't own at least one property, if you're a Chinese guy you aren't getting married unless you own a house.

 

The CCP have tried multiple times for force a Chinese silicon valley to happen and it has, to a certain point, but because most mega businesses in China have some form of government control and nobody wants to fuck with the CCP it really stifles Chinese innovation.

 

The best way I've heard it described is "In China, the government operates like a business while the businesses are forced to run like government entities" which I thought was a very poetic description.

[Kronoton]

3 hours ago, Kilrah said:

Pretty convenient to "seize" a monstrous money-generating machine for a bogus reason

 

I see nothing in the quoted news that would clarify if there were or were not unpaid power bills and what exact ruling was (for all we know it might have been a relative small sum that has been more then made up by the provider mining on those cards in the meantime).

 

4 hours ago, Spotty said:

If devoted to Ethereum mining, they could generate nearly $1 million in gross profits every day based on Ethereum's current difficulty at an assumed $0.06 per kWh energy cost.

 

4 hours ago, Spotty said:

They also have sites in Sweden and Iceland listed on their website

 

That would only work if the can get the power that cheap, consumer prices I found suggest 0.13€ for Island and 0.18€ for Sweden. Sure commercial rates will be lower but I'm not sure it is a viable option when considering setup and maintenance cost for running that many old cards.

[BuckGup]

Just now, Kilrah said:

I'm almost cetain they didn't go unused, the hosting provider was just using the situation to use them to mine for themselves.

 

Pretty convenient to "seize" a monstrous money-generating machine for a bogus reason and keep it for the 2 years it's relevant while the slow justice system proceeds to prove you wrong...

Thats how bitmain works. They mine on their ASICs as they dont have a ton of competition then sell them to consumers when the profitability starts dropping

[leadeater]

7 hours ago, Kronoton said:

That would only work if the can get the power that cheap, consumer prices I found suggest 0.13€ for Island and 0.18€ for Sweden. Sure commercial rates will be lower but I'm not sure it is a viable option when considering setup and maintenance cost for running that many old cards.

Some of the really large mining operations build facilities next to geothermal power plants in very cold climates and negotiate very low power rates from the producer as they are consuming very locally and have a guaranteed load amount which is what places want the most. I think one even built their own power plant in Greenland, not sure if they actually did it or just built close or partnered, but yea, cheap renewable power and free cooling isn't actually that hard to come by.

[StDragon]

485,681 AMD RX 470 8GB graphics cards * 145w per GPU = 70.4 Megawatts. 

[Spotty]

8 hours ago, StDragon said:

485,681 AMD RX 470 8GB graphics cards * 145w per GPU = 70.4 Megawatts. 

For mining operation I highly doubt they'd be running RX 470s configured to draw 145w. You can optimise them pretty well for mining, one of the reasons why they were a popular choice. I would probably estimate more like 70w per card, or about 35 megawatts total.

 

There's also the 60,000 Antmimer S9's which consume I believe around 1.3kW each. That would be an additional 70-80MW. All up what was recovered in the court case would be an operation in excess of 100MW (probably around 115-130MW). Actually makes it pretty believable that they would have a dispute over the power bill with their hosting partner.

 

9 hours ago, leadeater said:

Some of the really large mining operations build facilities next to geothermal power plants in very cold climates and negotiate very low power rates from the producer as they are consuming very locally and have a guaranteed load amount which is what places want the most. I think one even built their own power plant in Greenland, not sure if they actually did it or just built close or partnered, but yea, cheap renewable power and free cooling isn't actually that hard to come by.

Genesis mining lists on their website their site in Iceland is powered entirely by geothermal generated energy. Wouldn't surprise me if they built their own station or like you mentioned partnered to have one built close by. 

[X-System]

41 minutes ago, Spotty said:

For mining operation I highly doubt they'd be running RX 470s configured to draw 145w. You can optimise them pretty well for mining, one of the reasons why they were a popular choice. I would probably estimate more like 70w per card, or about 35 megawatts total.

With 70w, it makes almost 300 gigawatt-hours annual. It's equivalent 63 600 homes for average annual electricity consumption in France. It's a lot...

 

And not forget to add 60,000 Antminer S9's...

[Icarus_Radio]

On 8/28/2021 at 1:58 PM, Spotty said:

with China's recent crackdown on cryptocurrency mining

Nope, there is no so-called "crackdown" in China. What happened in Sichuan (70% of Chinese mining farms are located there) is that after the so-called "shutdown", the miner stayed low for a few days and waited for the government guys to leave, and they turned on the switch and started mining again. There is never a "flood of mining GPU"s appear on second-hand market.

[TetraSky]

So, they are only getting their mining rigs back ? No "lost revenue" amount to be paid or anything of the sort?

[CTR640]

On 8/29/2021 at 6:59 AM, X-System said:

With 70w, it makes almost 300 gigawatt-hours annual. It's equivalent 63 600 homes for average annual electricity consumption in France. It's a lot...

 

And not forget to add 60,000 Antminer S9's...

It gives the impression of how extremely shameless cryptomining is.