Bitcoin mining firms Compass and Dynamics spar over payments and 'hostage' hardware

Quick Take

  • Compass Mining has sued its hosting provider Dynamics Mining, seeking to regain access to mining equipment at a facility in main.
  • Meanwhile, Dynamics said that it terminated the contracts with Compass because of missed payments.

Bitcoin miner Compass and one of its hosting providers in Maine, Dynamics Mining, are involved in a growing spat that started over claims of missed payments.

Over the weekend, Dynamics came out on Twitter saying that it had terminated a hosting agreement with Compass on June 14 and accused the miner of missing three payments and being late on six others.

The company claimed that Compass Mining's power bills totaled $1.2 million, but that the miner had only paid $415,000 and $250,000 in initial power deposits.

On June 21, according to public records, Compass filed suit against Dynamics, seeking to regain access to mining hardware housed in Maine.

Then, in a statement on Wednesday, Compass addressed the allegations that had been circling around on social media since the weekend, saying that many of them were "completely incorrect."

"It appears that Dynamics misunderstood the contracts that it signed with respect to its facilities and its obligations thereunder. Compass has performed all of its obligations under its contracts with Dynamics, including its financial obligations," the company said.

Access to miners

In the lawsuit, the Compass accused Dynamics of holding its machines "hostage," according to Law360

Per the reported complaint, Compass alleged that Dynamics had blocked access to one of its Maine facilities (in Lewiston) and might even be using the equipment on-site (worth roughly $4.5 million) to mine for itself.

Compass Mining hosts mining machines from individual clients in facilities across the US and Canada. According to the company's statement, Dynamics operates roughly 1% of Compass Mining’s contracted capacity. They established contracts late last year at three different locations, per the complaint. 

DynamicsMining said on Twitter that it gave the company the option to remove its miners by June 25.

"This would require a payment of $861,533.15 but I would settle at $606,689.15 crediting them for the initial power payment," it said.

Disagreements over payments

Compass alleged in the complaint that it paid about $1.7 million towards the construction and operation of the three main facilities but that Dynamics hadn't fulfilled some of its obligations, according to Law360.

"Despite Compass' sizable payments, Dynamics has failed to materially advance the development of one facility, neglected the facilities, and even failed to provide power to the facilities in recent days," the complaint states.

Dynamics, however, said on Twitter that some of the money it received from the company was intended as loans to build the facilities that would host Compass hardware.

"It should be noted that these amounts were interpreted to be offset from the hosting fee that we would receive for hosting compass's miners. However, these two ended up being merged in one payment that included both the loan and the electricity bill," Dynamics wrote on Twitter.

With the lawsuit, Compass is alleging "breach of contract, conversion and unjust enrichment" and seeking a court order to prevent Dynamics from operating moving, selling or disposing of the mining equipment and to allow Compass onto the property, according to Law360. It is also asking for compensatory and punitive damages.

Between all this back and forth, the CEO and CFO of Compass announced their resignation on Tuesday, with the company citing "multiple setbacks and disappointments."

The Block has reached out to Dynamics for comment but did not hear back in time for publication. A representative for Compass said "the statements are absolutely incorrect," but did not answer other questions.


© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Catarina is a reporter for The Block based in New York City. Before joining the team, she covered local news at Patch.com and at the New York Daily News. She started her career in Lisbon, Portugal, where she worked for publications such as Público and Sábado. She graduated from NYU with a MA in Journalism. Feel free to email any comments or tips to [email protected] or to reach out on Twitter (@catarinalsm).