C7 sues Bitcoin mining firm for unpaid data centre services
Tue 13 Jan 2015
Data centre provider C7 has filed a lawsuit against its customer CoinTerra after the bitcoin mining firm has reportedly not been paying its bills for its data centre services.
The data centre company is demanding $5.4mn (approx. £3.6mn) in damages, court fees and related costs. The case comes at a time of great instability for cryptocurrency, particularly with Bitcoin’s value declining steadily to $280 after hitting a peak of nearly $1,200 in 2014.
CoinTerra produces and sells bitcoin mining hardware, as well as hosting and managing their product as a service. According to a Reddit user and customer of CoinTerra, the service had not sent out their weekly payment, and referred to a statement from the bitcoin mining service’s legal department reading: “The company has defaulted on its secured notes. The Note Holders have senior, secured and, we believe, perfected liens on all of CoinTerra’s assets, including servers.”
According to allegations listed in the lawsuite, CoinTerrra has been a customer of C7 since April last year, signing an 18-month contract to employ colocation, hosting, monitoring and management services across three C7 data centres.
In December the CoinTerra due balance amounted to $1.4mn. The current allegations argue that “upon information and belief, CoinTerra chose to pay C7 less than the amounts due in bad faith.”
C7 has reportedly been paying $12,000 per day to supply power to CoinTerra. The latest invoice sent to the bitcoin mining company was for $430,000, $350,000 of which was for power.
The Utah-based data centre provider is also claiming that hosting CoinTerra has resulted in loss of potential customers.
The bitcoin mining company also use CenturyLink colocation solutions, for 10 megawatts of capacity. CenturyLink has declined to comment on its relationship with CoinTerra, referring to the confidentiality of the contract between the two businesses.
CoinTerra is yet to provide comment on the lawsuit.