Mining Hosting Agreements: Terms That Recur in Disputes

Why These Terms Come Up

I am not a lawyer, and this is not legal advice. I come at hosting agreements from operations. A hosting agreement sets how a host runs a customer’s machines, what the customer pays, and what happens when the relationship ends. Public lawsuits and bankruptcy filings in the mining industry show the same five kinds of terms coming up again and again. This post describes each one, points to public cases covered elsewhere on this blog, and lays out how hosts and customers typically read the language.

The Five Recurring Terms

• 1. Uptime. Hosting agreements often state an uptime figure, such as 95 percent. The number depends on its definition: the measurement period, whether it applies per machine or as a fleet average, whose data is used, and what is excluded. A month has about 720 hours, so 95 percent monthly uptime permits about 36 hours of downtime. Agreements differ on whether scheduled maintenance or curtailment counts inside that figure. Customers often read uptime as the share of time their machines were hashing. Hosts often read it as the share of time power and network were available to the machines, minus listed exclusions.
• 2. Curtailment. Sites in markets like Texas can earn money or avoid high prices by powering down during grid peaks. Some agreements say when machines may be curtailed, how those hours count against uptime, and who receives any curtailment revenue. Others say little or nothing. Hosts commonly view curtailment revenue as part of their power position, while customers sometimes view it as tied to their machines’ load. The Riot and Rhodium dispute over the Rockdale facility included claims over this kind of revenue. More on how curtailment works in Curtailment Explained.
• 3. Power price and pass through. Some agreements set a fixed rate. Others let the host pass through certain cost changes, such as new taxes, tariffs, or utility increases. The language usually lists which events qualify and what documentation comes with a pass through invoice. Hosts tend to read pass through terms as covering cost changes outside their control, and customers tend to read them more narrowly. Celsius and Core Scientific disputed this kind of language with tens of millions of dollars at issue.
• 4. Deposits and prepayments. Many hosting agreements require a deposit or prepayment, often equal to one or more months of fees. The terms cover the amount, where the money is held, and when it is refunded. Some agreements tie payments to capacity that is actually energized. How deposits are treated when a host enters bankruptcy is a legal question decided case by case. The Compute North bankruptcy is a public example of customers with deposits outstanding when a host filed.
• 5. Exit and equipment return. Exit terms cover notice periods for both sides, the condition machines are returned in, who packs and ships, how fast, and whether the host claims any lien on the hardware for unpaid fees. Public disputes have involved claims about access to machines held in hosting facilities and about the handling of mined coins at the end of a hosting relationship.

Reporting and Visibility

Agreements also differ on reporting. Some list monthly uptime reports, pool data reconciliations, or copies of utility invoices as deliverables. Others leave reporting to the host. Customer visibility varies too. In some arrangements customers keep their own pool accounts and payout addresses and have read access to their machines. In others the host manages the pool connection and sends summaries. Each setup has tradeoffs for both sides, touching on control, convenience, network security, and staffing cost.

When one of these terms is in dispute, an operations view can help explain how hosting sites work and what the site records show. That is the kind of explanation I provide as a crypto hosting expert witness. Some of these disputes are heard in arbitration rather than court, under arbitration clauses in hosting agreements.