County commission OKs Bitcoin lawsuit settlement | WJHL

JONESBOROUGH, Tenn. (WJHL) — A controversial Bitcoin mine in Limestone must shut down by March 2026 after Washington County commissioners approved a proposed lawsuit settlement in a called meeting Monday.

“Knowing that it would come to an end would make us feel much better,” Preston Holley, who lives across from the facility that opened in early 2021, told commissioners before they voted 13-2 in favor of the deal. Holley was one of five citizens who spoke during a public comment period and more than 40 who turned out for the meeting.

Holley said the operation was brought to the community without their knowledge. He said it has affected many people living around the facility.

“For myself and the neighbors around me, being at our own home has been changed tremendously,” Holley said. “You don’t go outside and hear the same things and see the same things that we looked for when we all built our homes out in the country in this beautiful place.
Other people have had you know, loss of property value. They’ve had real estate transactions to go bad as a result of this. And, you know, it definitely changed the way we live out in Limestone.”

The Red Dog facility would close down even earlier if the company finds another location and starts operation there. According to Washington County zoning rules, no zoning districts currently allow cryptocurrency mining, so any local relocation would likely have to be in either Johnson City or Jonesborough.

The settlement also levies monetary fines against Red Dog and BrightRidge, the local utility that leases land and sells power to Red Dog and that was the initial defendant.

“To set a date, not in the timeframe that we want them out because I would like to have seen them out yesterday or the day before or the day before, but this is an opportunity,” Commissioner Josh Edens said before joining the 12 other commissioners who voted yes. “Not the way we want it, but to see them out with a hard stop date that is enforceable by contract.”

The settlement, already approved by BrightRidge and Red Dog’s leadership, will now to go Washington County Chancery Court Judge John Rambo for approval.

Mayor Joe Grandy said the March 2026 date coincides with Red Dog’s contract agreement with the TVA and BrightRidge.

“It probably seems like a long time, but you got to realize they’ve been operating out there for three years,” Grandy said. “And so we’re more than halfway through the contract period already. So this agreement will give a date certain at a maximum time that they will be shut down.”

How we got here

BrightRidge leased Red Dog property next to its substation on Bailey Bridge Road in the pastoral New Salem community in late 2020 after getting the property rezoned to A-3 (agriculture business) in February 2020. BrightRidge told county commissioners at that time it planned a “blockchain data center” but made no mention of another business or of a Bitcoin mine.

“If there’s any doubt about how or why we got here it’s because of BrightRidge,” Commissioner Freddie Malone said while commissioners discussed whether to accept the deal.

Neighbors began complaining of incessant loud noise at the site in May 2021, several months after Red Dog brought the mine to full capacity with $10 million of computer equipment that can use up to 25 megawatts of power. Red Dog is BrightRidge’s largest customer.

Shortly after, commissioners learned Washington County’s zoning administrator and attorney said the use didn’t meet guidelines. The noise comes from high-powered fans used to cool the “mine’s” computers, which perform complex equations in a race to “unearth” new coins of the cryptocurrency Bitcoin.

They told BrightRidge to shut the mine down in September 2021. BrightRidge refused and said the county’s issue was with Red Dog. Red Dog said they were simply operating under the terms of their lease with BrightRidge, which had gotten the rezoning in the first place.

The county sued BrightRidge in November 2021, claiming the Bailey Bridge Road site violated zoning rules and had been constructed without a permit. In June 2022, the county commission approved a settlement agreement that would have allowed Red Dog to build a new mine at the Washington County Industrial Park in Telford.

That decision drew a backlash in a new community, and after seven new commissioners came on post-election last fall, they voted to back out of the still unfinalized settlement. Early this year, Washington County Chancellor John Rambo set a February 2024 trial date.

Several commissioners expressed their dissatisfaction with some details of the proposal, including how long it allows Red Dog to operate — and BrightRidge to sell it massive amounts of electricity. But Jeff Ward, the attorney who has joined Washington County Attorney Allyson Wilkinson in representing the county, said additional costs were about to kick in as the case entered a new phase of document filings and pre-trial work.

He and Wilkinson also noted the possibility the county could lose the suit, despite Rambo already having ruled the operation did violate zoning rules — and they said if the county won, appeals would likely make it at least 2025 before the mine could conceivably shut down. That would be after substantial additional legal fees to the county.

A number of commissioners registered their complaints about the length of time before Red Dog would have to shut down, and several questioned how enforceable the agreement would be. Ward said the fact that it would be viewed as a contract would make a judge likely to file an injunction to shut down the mine if Red Dog violated the terms.

“The proposal being provided to you tonight is basically a take-it-or-leave-it proposal,” Ward said.

“I know everybody would like to have more time, I know the citizens would like to have more time.”

Commissioner Jim Wheeler made a motion to approve, saying “I think we have an opportunity here to settle this with a firm date and we have as much opportunity to enforce this as we do any other outcome I’ve seen.”

Settlement details

In addition to a contractual guarantee the Limestone operation would shut down no later than March 2026, the proposal carries several costs for both Red Dog and BrightRidge.

The first would come within 30 days of Rambo entering an order dismissing the lawsuit with prejudice (meaning it couldn’t be refiled). By that point, Washington County would receive a lump sum payment of $25,000, with half the money coming from Red Dog and half from BrightRidge.

Additionally, Washington County would collect $200 a day, payable the fifth of each month, for as long as the mine continues operating at its Bailey Bridge Road location — again with half the money coming from BrightRidge and half from Red Dog.

If the settlement were finalized quickly in court and the mine stayed open until the deadline, those penalties would total right around $100,000.

The 51 homes and one church that BrightRidge has been providing free high-speed internet for since last year will continue to receive that until the mine shuts down as well. The cost will be shared by Red Dog and BrightRidge and is estimated to be valued at $150,000.

Within 120 days of shutting down the current site, Red Dog would have to remove all equipment from the site, including the pods (storage-unit like buildings) housing the servers. Within 120 days after that, BrightRidge would have to remove all the supporting equipment it provided.

Resolution would bring an end to a long dispute that has created a high degree of citizen concern and damaged relations between BrightRidge and the county commission. Ward said he realized the specifics of the deal weren’t likely to seem completely just.

“I know some of you don’t really feel strongly that it’s in the county’s best interest, but that it still satisfies most of what you’re trying to do for your citizens and hopefully gives them some surety of what’s coming down the line, and hopefully gets a chance to build back trust with your partner entity BrightRidge down the road,” Ward said.