Layer1, a mining company, accused of patent infringement

Lancium, a company specialising in energy-demand management, has accused Layer1 of patent infringement over its adopted demand-response model for electricity, according to CoinDesk.

Supported by Peter Thiel and other investors, Layer1 began Bitcoin mining operations in Texas in February this year.

In May the company said it would monetise turning off equipment during periods of peak grid demand and redirecting capacity to other uses. To this end, Layer1 signed with the Electric Reliability Council of Texas (ERCOT) demand-response contracts, agreeing to shut down equipment upon notice and to free up 100 MW of load for the grid.

During the summer months, with air-conditioning running at full tilt, Texas experiences periods of peak electricity demand. Wholesale prices in the ERCOT grid soar during these periods. In the most stressed week of 2019, prices jumped from $120 to $9,000 per MWh.

The annual profit from such a readiness to suspend mining was estimated at $17 million.

However, Lancium now accuses Layer1 of misusing patented technology that enables modifying energy consumption and shutting down data centers during price spikes.

According to the complaint filed in the Western District of Texas, the company had attempted to notify Layer1 of possible patent infringement in May, but received no response.

Lancium seeks damages commensurate with the infringement of the patented technology and a permanent injunction against further use.

In October 2019, Layer1 drew in $50 million with backing from PayPal co-founder Peter Thiel and Digital Currency Group. Thanks to these investments, the company’s market value reached $200 million.

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