JONESBOROUGH, Tenn. (WJHL) – Months before Washington County commissioners learned the county had cause to order a controversial Bitcoin mine closed, the county’s attorney recommended to Mayor Joe Grandy that the county consider acting to shut the facility down.
Records obtained by News Channel 11 show that County Attorney Allyson Wilkinson emailed Grandy a prepared opinion on May 25 about Red Dog Technologies’ operation next to BrightRidge’s Bailey Bridge Road substation.
Wilkinson wrote that BrightRidge was violating the county’s A-3 (agriculture business) zoning rules by allowing Red Dog to operate a cryptocurrency mine there. BrightRidge got approval for rezoning from A-1 (general agriculture) on Feb. 20, 2020 in a rezoning request that did not mention a private-sector partner or cryptocurrency mining.
I recommend that the County consider issuing a notice that the operations and or use at the property cease immediately … and further advise that the operations be terminated permanently since it has been established that it is not a permitted use.Washington County Attorney Allyson Wilkinson May 25 email to Mayor Joe Grandy
The primary violation, Wilkinson wrote, stemmed from the use. A-3 zoning allows a public utility to operate, but Wilkinson and Planning Director Angie Charles both concluded Red Dog leasing BrightRidge property, buying power from BrightRidge and mining for cryptocurrency didn’t meet that standard.
Additionally, Wilkinson noted a violation due to BrightRidge’s failure to get a final certificate of occupancy related to the zoning compliance permit before Red Dog began operating.
Wilkinson and Charles had been discussing noise complaints from neighbors regarding the site and digging into the run up to the zoning approval after media reports about the complaints, including a May 17 News Channel 11 story.
Wilkinson noted in her email to Grandy that BrightRidge, which said it would open a “blockchain data center,” added that the center’s cooling fans would result in noise that was “considered small” and would “not impact or be heard from adjoining properties.”
An inappropriate use how, exactly?
In her May 25 email to Grandy, Wilkinson provided specifics on the “public utility” approved use in the A-3 zoning district. Section 603.1 lays out permitted uses, and 603.1.7 simply says “public utilities.”
Wilkinson wrote that elsewhere the overall zoning resolution spells that out further and that in the resolution’s context a public utility is the utility or one of its facilities “providing a public service which is owned or authorized by a municipal, county, state or federal government in the provision of such services as transportation, water supply, sewerage treatment, electricity, natural gas or telephone, telegraph or microwave transmission.”
Charles and her office reviewed the materials associated with Red Dog’s operation, made site visits and determined “the use is not a permitted use in the A-3 zoning district,” Wilkinson wrote.
She noted that planning commission members, who approved the request prior to the county commission, asked about noise and that the later request specifically said it wouldn’t be an issue.
“To the contrary, the operation of the facility has created tremendous noise…” Wilkinson wrote.
She also found it “important to clarify that the facility does not appear to produce any power but rather consumers power for a third-party’s operation that is not a public utility as defined in the Zoning Resolution.”
The county’s zoning resolution allows the planning director, “any other appropriate authority,” or neighbors who could be damaged by a violation to seek remedies. Those can include “injunction, mandamus, or other appropriate action in proceeding to prevent the use.”
Was the county misled?
Wilkinson didn’t stop at recommending Grandy consider authorizing a cease and desist order.
She said it was important to show that the county had acted in good faith when commissioners unanimously approved the rezoning request, but would also be in good faith ordering a shutdown.
With neighbors talking lawsuit, she wrote, “It would be in the county’s best interest to consider ways to memorialize that the County was not advised of information pertinent to the issuance of a permit.”
The question, she wrote, was “whether it was reasonable for the Planning Commission to presume” that BrightRidge’s intent was to use the property for a public utility purpose.
BrightRidge also mentioned a future solar project in the request, Wilkinson wrote. And blockchain technology could feasibly be used directly by BrightRidge “to transform some existing utility processes,” she added.
Because of those facts, “it appears to be defensible that the Staff Recommendation and Planning Commission conclusions are reasonable in light of the circumstances,” she wrote, later adding “staff recommendation relied upon information provided by BrightRidge which has subsequently been determined to be inaccurate.”
Wilkinson recommended to Grandy “that the County consider issuing a notice that the operations and/or use at the property cease immediately … and further advise that the operations be terminated permanently since it has established that it is not a permitted use.”
Three days later, Charles emailed Wilkinson and Grandy a draft letter “for your review and comment.” It was addressed to Sam Ford, BrightRidge’s rezoning agent and outlined the unpermitted use and the operation prior to final inspection.
“You are immediately ordered to permanently discontinue the above unlawful use and cease operating the buildings/premises.”
The records requested show no indication that the letter was ever sent.
And as county commissioners intensified their questions and criticisms of the operation during July and August Q and A’s with BrightRidge CEO Jeff Dykes and Red Dog’s Todd Napier, they eventually began asking whether the mine could be ordered shut down — at least until noise mitigation efforts were concluded.
“Have you not conversed (with Red Dog) about shutting down (temporarily) and if not, would you on behalf of the citizens of this county this is affecting,” Commissioner Jim Wheeler asked Dykes at the Aug. 23 meeting.
Commissioner Brian Davenport led an eventual directive to have Wilkinson investigate “what we can do as a commission legally to get involved here as well.”
What Davenport didn’t know — and what Grandy didn’t offer — was that Wilkinson already had an opinion of what the county could do.
She had provided it to Grandy three months earlier. A month later, she provided a very similar opinion to the commission at its Sept. 27 meeting.
The commission directed that a cease and desist letter be sent and one was the very next day.
As of Tuesday morning, the Bitcoin mine was still operating, according to nearby neighbors.
News Channel 11 requested an interview or statement from Grandy on Oct. 13, Oct. 15 and Oct. 18. Grandy’s office responded to the first two requests saying he was unavailable but had provided no response to Oct. 18’s inquiry as of noon Oct. 19.