JONESBOROUGH, Tenn. (WJHL) — Washington County Chancellor John Rambo has rejected BrightRidge’s motion to dismiss a lawsuit that aims to force a shutdown of a Bitcoin mine near its Bailey Bridge Road substation in Limestone.
The motion was BrightRidge’s latest attempt to have the lawsuit thrown out. The electric utility, which leases property adjacent to the substation to the mine’s owner, Red Dog Technologies, had argued that as a “political subdivision of the state” it was not subject to local regulations.
Rambo’s decision clears the way for a full hearing in mid-July on whether the county can force the mine, which Red Dog has claimed creates a net profit of about $2 million a month, to close permanently for violating zoning regulations.
Washington County sued BrightRidge in November after the utility refused a county order to shut down the mine, which creates significant noise from fans cooling hundreds of computers. Those computers perform complex calculations to both verify transactions of Bitcoin, a cryptocurrency, and to try and unearth newly minted “coins.”
Red Dog became BrightRidge’s largest power user when it began operations in late 2020, using enough electricity to power more than 10,000 homes. The noise from its fans elicited complaints from neighbors in the rural community nearby starting. in late April 2021. According to the county, it was then that planning department officials and others learned it was not BrightRidge running the operation even though it had applied for a rezoning for itself to build and run a “data center.”
BrightRidge referred the county to Red Dog when officials ordered the shutdown in September 2021, but the utility returned to claiming its own involvement for this latest effort to quash the suit.
Attorneys for BrightRidge and Red Dog cited a case that prevented Davidson County from enforcing its zoning ordinance against the state of Tennessee when the state wanted to construct a mental hospital. Local governments’ power to enforce zoning rules shouldn’t be applied to the state unless “there is an express provision that these do apply to the State.”
Washington County argued that shouldn’t apply in the Bitcoin case because the older case involved “building a building for ‘governmental purposes.’”
BrightRidge wasn’t building something to fulfill its duty as a political subdivision of the state in this case, the county argued, but instead leasing property to a private business.
“No case law cited by the defendants supports the proposition that if a political subdivision leases property to a third-party commercial venture, and the third-party commercial venture constructs a building on the leased property, that that building does not have to be properly zoned,” the county argued.
In the end, Rambo found in favor of Washington County. He has already ruled that the Bitcoin mine violates zoning regulations in the A-3 (agriculture business) zone.
A trial is now set for July 11-13. With Rambo having already ruled that the Bitcoin mine violates zoning regulations, BrightRidge and Red Dog will be looking to prove that Washington County knew what was planned for the site and approved it anyway.
If that can be proven, Rambo could rule that allowing a shutdown now would be unfair to BrightRidge and Red Dog even though the use violates zoning rules — a principle called “equitable estoppel,” that would prevent the county from shutting down the operation because to do so would not be equitable or fair to BrightRidge and Red Dog.