JONESBOROUGH, Tenn. (WJHL) — Washington County’s lawsuit against BrightRidge and Bitcoin miner Red Dog Technologies is headed back to court after county commissioners rejected a settlement proposal Monday night.
People erupted in cheers inside a packed courtroom at the county’s justice center after commissioners voted 13-2 against allowing Red Dog to build a new mine in Telford, close their existing one in Limestone and end a court battle that started last November.
The effort to have Red Dog’s 25 megawatt Bitcoin mine in Limestone shut down — on grounds that it violates the county’s zoning ordinance — has been on hold in Washington County Chancery Court since the commission agreed to a draft settlement in early June. That proposal called for Red Dog to build a new facility at Telford’s Washington County Industrial Park (WCIP) and quickly drew opposition from people in that part of the county.
Commissioner Jim Wheeler said he was “disappointed in the language of the final settlement” and that it differed in substantial ways from a draft agreement reached in June, when Red Dog CEO Trey Kelly was present. He mentioned how noise would be measured and enforced as one major difference.
“I don’t think we’re anywhere close to what we said,” Wheeler said.
The county’s lawsuit against both Red Dog and BrightRidge will likely soon be set for a jury trial in Washington County Chancellor John Rambo’s court. BrightRidge was the initial defendant in the suit because it leases property to Red Dog, sells it power, and initially requested and received a rezoning for that property.
“There’s risk,” Wheeler said of the return to court. “I think it’s wise for us … to accept that there’s risk and what that does is sends a stronger message that we’re willing to accept that risk.”
The 12 citizens who spoke during public comment covered an array of topics related to the mine’s impact but had a common refrain: Residents don’t want Bitcoin mining in the county, and Red Dog’s Kelly had said in June that Red Dog does not want to operate somewhere it isn’t wanted.
“Folks in New Salem community (Limestone) and the folks in Telford are united in this one theme: that Bitcoin mining is not welcome in Washington County,” New Salem Baptist Church pastor Craig Ponder said. Ponder lives where the company’s current Bitcoin mine has operated since late 2020.
Emily Curran of Kyker Road in Telford brought her two young sons to the podium. She asked commissioners in the districts near the current and proposed mines to “stand up for my family, my children and all those who would be affected by a Bitcoin mining operation near the school (Grandview Elementary),” she said.
Curran also spoke to commissioners in other districts, asking them to “set precedent here and now.”
Like the other 11 who spoke, Curran’s comments received applause from more than 100 people inside the commission chambers.
The vote was necessary because June’s draft wasn’t official, and work on a final written agreement requiring a fresh vote took almost five months. That was long enough for the 15-member commission to gain seven new members following the August election and for organized opposition to grow in Telford.
It was also long enough for David Bright, who owns and operates Bright’s Zoo a couple miles from the proposed WCIP site, to join those opposing the settlement. He said he would close the zoo if a Bitcoin mine opened nearby — and he contrasted what he said was no community benefit from the Bitcoin mine with the taxes and power bills the zoo has paid since January 2019.
They include $653,497.86 in sales tax, $71,189 in property tax and $307,780 in electricity bills.
John Abe Teague has owned a farm about a quarter mile from Grandview Elementary and the Industrial Park since 2002. He said he and his wife have adapted to living near a school and to living near an industrial park.
“That’s progress,” Teague said. “That’s jobs. But I can tell you tonight that my wife and I are totally against Red Dog.”
On Nov. 3, the county’s Commercial, Industrial and Agricultural committee voted 4-0 to recommend that the full commission reject the settlement proposal. Ken Huffine, the committee’s fifth member, is also on the BrightRidge board and abstained from the vote.
Huffine and Marty Johnson, a new commissioner who represents the district where the Limestone mine is located, were the only ‘no’ votes Monday.
Kelly, who is also CEO of Red Dog’s parent company GRIID Infrastructure, was in attendance but declined to speak after the vote. He did offer the following written statement:
“I am disappointed that after months of good faith negotiations with Washington County leaders, a resolution was not reached,” Kelly wrote. “As litigation resumes, Red Dog Technologies and GRIID Infrastructure will have no further comment at this time.”
Dan Westbrook lives in Telford, spoke during the public comment period and had a much different take.
He said even if Red Dog could address the noise issue at a new site, many other concerns remain including generation of electronic waste as computer quickly wear out or become obsolete.
“(I’m) very pleased with the outcome on that,” Westbrook said. “I think it sends a very strong message when the vote is 13 to 2 that we’re quite willing to go to court.”
What comes next?
In the months since the draft settlement proposal was approved, the current mine has continued to operate unabated next to BrightRidge’s substation on Bailey Bridge Road. The draft settlement called for it to close no later than the end of 2024, or as soon as Red Dog started up a new mine in Telford.
The facility consists of high-powered computers that solve complex algorithms to “mine” new cryptocurrency. Fans that cool the computers at the Limestone mine create significant noise, which led to complaints by people living in the rural community starting in May 2021.
Now, Washington County Chancellor John Rambo will determine when to set a jury trial. That process could take months, with any appeal pushing a final resolution out more than a year.
Whether Red Dog keeps operating the Limestone mine through the duration of a lawsuit is an open question. News Channel 11 has previously reported that GRIID, Red Dog’s parent company, has been found out of compliance with a line of credit with its lender.
In September, Blockchain Access Limited, the lender, agreed to transition the credit line to a term loan, which, totals $57 million. The price of Bitcoin has hovered between $16,000 and about $21,000 for most of the past six months after topping $50,000 around the time the lawsuit was filed in November 2021.
Whether GRIID Infrastructure’s financial challenges end up having a direct impact on how long it operates in Washington County is an open question, a local economist told News Channel 11 Nov. 10.
“If they’re meeting their variable costs with what they earn from mining Bitcoin, their lender might be pretty patient through the ‘crypto winter,’” Milligan University economist David Campbell said. Those variable costs would include the power purchased from BrightRidge, which leases land to Red Dog next to its Bailey Bridge Road substation, and other non-debt ongoing expenses.