County may sue over Bitcoin mine if attorneys’ meeting doesn’t resolve issues

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A Red Dog Technologies Bitcoin “mine” at a Brightridge substation in rural New Salem community, Washington County, Tennessee has neighbors asking for noise mitigation.

JONESBOROUGH, Tenn. (WJHL) – Washington County and power provider BrightRidge may be headed to court over a Bitcoin mine next to a BrightRidge substation unless attorneys from both sides can come to an agreement.

That was the upshot of a report from County Attorney Allyson Wilkinson Monday, a month after commissioners directed her and Planning Director Angie Charles to order the Red Dog Technologies operation shut down for violating the A-3 zoning resolution.

Wilkinson told commissioners that after nearly a month of the mine’s continued operation despite a Sept. 28 letter ordering its shutdown, she wrote BrightRidge’s attorney Oct. 22 asking him to respond by this Friday and set up a meeting to seek a resolution that would keep the matter out of court.

If that’s unsuccessful, she said, “you have already authorized litigation should it be necessary.”

Commissioners’ reserves of patience seemed to be running low.

“If BrightRidge wanted it stopped they would stop it,” Commissioner Freddie Malone said during discussion of the operation in rural Limestone and its violation of the county’s A-3 zoning rules.

And Commissioner Kent Harris, who represents the district affected, called for Mayor Joe Grandy to resign as the county’s BrightRidge board representative.

Harris cited Grandy’s lack of response when the planning administrator and county attorney told him in May that the operation violated zoning rules and should be closed.

“The commission in my opinion needs a representative on this board who will represent the commission and the citizens of Washington County and I feel that you have not done that,” Harris said.

Grandy didn’t make that recommendation or respond to the emails. He wasn’t present at Monday’s meeting.

Controversy around the mine — which involves high-powered computer equipment conducting complicated algorithms to try and “unearth” new Bitcoins — centered around how noisy the fans that cool those computers are.

But last month, commissioners learned the site wasn’t a permitted use, regardless of any noise issues.

Wilkinson reminded commissioners that at this point, the question of the Bitcoin mine’s future operation revolves around regulations and whether the mine meets those.

“We’re not discussing noise,” she said. “We’re discussing permitted use and the permitted use specifically is a public utility.”

The Sept. 28 letter to BrightRidge said as much.

BrightRidge responded promptly with a letter from CEO Jeff Dykes to Wilkinson. That letter, as Wilkinson put it, claimed that the planning and staff, including Charles, are “subject matter experts.”

Dykes wrote that BrightRidge “sought direction” from the Charles and her staff when they chose to seek A-3 zoning. 

Wilkinson, though, said any advice in that regard was related to the site’s future use as a solar farm and to its operation as a BrightRidge facility, not by a private entity.

While the rezoning was requested by and granted to BrightRidge, Dykes also wrote that “it appears” Charles’s Sept. 28 letter “should have been directed to the leaseholder and operator of the facility, Red Dog Technologies.”

If the county pursued “remedies” for the unapproved use of the land, “any such action should directed to Red Dog Technologies.”

Wilkinson told commissioners that was “a misnomer.”

“What you approved was BrightRidge’s request for the use,” she said.

What happened next

After the county received Dykes’s letter, Charles and one of her employees inspected the property the same way her department normally would before issuing a certificate of operation — something Charles said BrightRidge didn’t undergo prior to Red Dog starting its operation.

On Oct. 22, she emailed notes from her site inspection to two GRIID employees, Marty Gibbs and Will Updegrove. GRIID is the company that BrightRidge first communicated with about a Bitcoin mine.

The email suggests that rather than Red Dog being a new name for GRIID, Red Dog is “under the GRIID umbrella.” Updegrove is the mine’s site manager and is a GRIID employee, and told county representatives that all the employees there are GRIID employees.

Charles wrote that Updegrove told her the mine operates from 8 p.m. each night until 2 p.m. the following day. He said the timing would change Nov. 2 presumably to adjust to when off-peak rates are available as cold weather arrives.

Those admissions, she wrote “confirms that the property owner (BrightRidge) has no intention of shutting down the facility.”

And when Updegrove told her BrightRidge hadn’t informed him about the stop order, she “respectfully requested that the operations cease immediately.”

Charles also outlined a number of deficiencies that would need to be corrected even if the site were an approved use, including several stormwater-related issues. Those would need to be corrected within two weeks to avoid violating state environmental regulations, she wrote.

To the attorneys

After Charles’s email, Wilkinson wrote a letter Oct. 22 to Steve Darden, the attorney representing BrightRidge. In it, she told commissioners, she “urged (Darden) to evaluate this matter and to provide BrightRidge with a recommendation that comports with the zoning resolution.”

Wilkinson gave Darden until Friday to contact her and set up a meeting “to ensure we are both understanding what legal authority there is controlling the permitted use.”

That authority includes the county’s right to sue BrightRidge for not complying, Wilkinson said, and to seek a court injunction forcing the mine’s shutdown pending an outcome in the lawsuit.

Commissioner Jim Wheeler, himself an attorney, asked Wilkinson if she knew of any case in which a tenant such as Red Dog would be responsible for complying with zoning — rather than the property owner.

“I don’t know of any basis for this statement,” Wilkinson said of Dykes’s claim that Red Dog is the proper party to send any orders to regarding zoning violations.

“That’s one of the reasons that I’m hopeful that when we sit down with the lawyer and step through this and make sure that we’re all looking at this under Tennessee law and under the zoning resolution, that there’s more clarity and that he will be able to provide his client with that recommendation (to comply).”

And she made it very clear that she wouldn’t advise commissioners to have the county “engage with a permit applicant’s tenant or any other person that they do business with. The county’s business is with BrightRidge.”

County locked and loaded, Wilkinson says

When Wheeler asked if the county commission would need to reconvene after a scheduled executive session if it wanted to take action barring an agreement with BrightRidge, Wilkinson said no. “You have already authorized litigation should it be necessary,” she said. 

Commissioners “may not even need executive session,” she added, saying what she shared in the public meeting was the same thing she would share in the executive session. “I’m happy to do it in a public meeting, these are public documents, this is a public concern…”

Asked by Commissioner Mike Ford whether the county was “spinning its wheels,” Wilkinson said she wanted to be sure all parties were “dealing with clear information.”

For instance, she said, GRIID’s representatives stating to Charles they weren’t aware of BrightRidge being informed the use was a zoning violation is “very important information that has been developed that’s of public record since your last meeting.”

Commissioners “disappointed” in current situation


Commissioner Freddie Malone said the “tone or tenor” of Dykes’s letter left him “disappointed.” He said he’d expected operations to cease after the Sept. 28 letter from Charles that ordered just that.

“But based on the tone and tenor of this letter it sounds as if BrightRidge isn’t simply saying, you know, ‘we made some bad decisions, we made some mistakes, we’re sorry, let’s move past it,'” Malone said.

“It would seem that the letter doesn’t say that. It would seem that the letter says exactly the opposite — that they don’t recognize the decision made by this body and they’re going to fight. Is that a fair assessment?”

Freddie Malone asks county attorney Allyson Wilkinson a question. (Photo: WJHL)

Wilkinson said she couldn’t speculate “about what is in BrightRidge’s mind today.” But she said BrightRidge does have a very strong reputation in the community and that the county “views the matter as a business dispute.”

People may get on different sides of a business dispute and sometimes do, Wilkinson said. She referenced a “longstanding partnership” between the county and BrightRidge.

“That is why I had extended this letter to request that I show some professional courtesy and hear from their lawyer what their position is rather than these other statements.”

Wilkinson said her hope is to mediate before litigation is necessary.

“You can invite yourself to a lawsuit but you have to ask to get out, so it’s always prudent in my view to take a conservative approach and exhaust all possibilities even though it might look like you’re spinning your wheels, sometimes you get out of the ditch.”

She said it might take about a week to learn whether a lawsuit can be averted. But she made it clear that in her opinion and that of Charles “it is conclusive that they are operating … without a permit and with the understanding that the county views it as an unpermitted use.”

County Attorney Allyson Wilkinson addresses commissioners (Photo: WJHL)

Wheeler asked about “immediate relief” if conversations with Darden don’t go well. Wilkinson said she would seek an injunction forcing the operation to cease.

Wheeler said he took his father, a former commissioner of agriculture, to the site this past weekend, who said he’d “never seen a farm like that.” Wheeler said he had heard the site was down at one point, but it was up and running when he visited.

“I just find it extremely frustrating that Red Dog has not stopped operation until they could get this resolved,” he said.

“To me that’s a clear indication they’re not trying to be a good partner.”

As for BrightRidge, he said they are the ones violating the cease and desist order.

Malone agreed, saying “BrightRidge provides power to that location every moment of every day.

“BrightRidge could stop that if they wanted to,” he said. “There may be legal ramifications, I don’t know about agreements between the two parties, but if BrightRidge wanted it stopped they would stop it. 

“That is what is disappointing to me.”

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