City Council Settles with Crypto Mining Firm | News


The Niagara Falls City Council has given its approval of a resolution to resolve a dispute with a cryptocurrency mining firm situated on Buffalo Avenue.

On Wednesday night, the Council voted 4-to-1 in favor of a settlement pact with U.S. Data Technologies Group Ltd. and U.S. Data Mining Group Inc., trading as U.S. Bitcoin. Councilman Vincent Cauley was the lone dissenter.

With the deal, the crypto-miner should be able to obtain a permit to operate under the requirements of a recently adopted ordinance that modified the city’s zoning code and imposed new limits on industries with high energy use.

The agreement requires that U.S. Bitcoin comply with a series of noise reduction and other abatement standards. In addition, the company must pay $150,000 to the municipality, a considerable decrease from the more than $1.5 million in contempt fines accumulated by the crypto firm during the course of their legal battle.

The settlement calls for U.S. Bitcoin to withdraw any court proceedings it has against the city and for a temporary restraining order (TRO) and contempt order, linked to the TRO, to be vacated.

In early March, New York State Supreme Court Justice Edward Pace signed an order directing U.S. Bitcoin to close down its Buffalo Avenue operation. This followed a period of tense negotiations between the city and the firm’s legal representatives over the wording of an order to implement a decision by another judge, who had found U.S. Bitcoin in violation of the city’s high energy use industry zoning code.

Supreme Court Justice Frank A. Sedita III had ordered U.S. Bitcoin to stop operating its facility while city lawyers pursued a preliminary injunction to compel them to obey the new regulations governing high-energy use industries. Pace determined on Jan. 25 that U.S. Bitcoin was working its facility in contravention of the order issued by Sedita and held the company in contempt.

At the time, Pace also ruled that if U.S. Bitcoin continued to run the facility, he would impose fines of $10,000 per day through Feb. 1 and then raise the fines to $25,000 a day until the crypto mining stopped. The fines dated back to Dec. 9, the date when Sedita first issued his temporary restraining order that instructed U.S. Bitcoin to cease operations while the lawsuit looking for the preliminary injunction wound its way through the courts.

The provisions of the settlement are as follows:

• Restricting noise output from the facility to no more than 65 decibels, a level both sides agree would be in line with the city’s new high energy usage overlay district.

• Construction of a “sound dampening wall” at the property to maintain the standard of sound from its operations as called for under the city’s overlay district regulations.

• Collaboration with the city to select a “third party,” “independent monitor” who would be responsible for guaranteeing compliance with the city’s noise level standards.

• Submission of completed applications for all “permits, variances and approvals” needed to comply with the city’s new high energy usage overlay district. The proposed deal limits U.S. Bitcoin’s costs for “any and all applications” at $100,000.

In addition to an up-front, good faith $50,000 fee, the settlement also requires U.S. Bitcoin, within 30 days of the agreement’s effective date, to pay the city a $100,000 “compliance fee” for the goal of “showing U.S. Bitcoin’s commitment to amicably settle all disputes presently existing between the parties.”

The agreement would also necessitate U.S. Bitcoin to reimburse the city for “attorneys’ fees and costs” related to its enforcement action against the company. The reimbursement amount detailed in the settlement is $180,000.

Prior to the Council action, Bryan Maacks, who lives near the U.S. Bitcoin facility, expressed some misgivings about the agreement.

“I am a victim of Bitcoin’s nuisance noise,” Maacks said. “What does quality of life mean to you? How would you feel if the comfort of your home was pulled out from under you?”

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