The Niagara Falls City Council voted to accept a settlement agreement in its bitter legal battle with a cryptocurrency mining company that operates a facility on Buffalo Avenue.
The Council voted 4-1 on Wednesday night, opposed only by Councilor Vincent Cauley, to approve a deal with US Data Technologies Group Ltd. and US Data Mining Group Inc., doing business as US Bitcoin.
Approval of the deal should put the crypto mining firm on the path to obtaining an operating permit under the requirements of a recently enacted ordinance that amended the city's zoning code and placed new restrictions on energy-intensive industries.
The agreement requires US Bitcoin to comply with a number of standards for noise reduction and other reductions. It also requires the company to pay costs of $150,000 to the city, a marked reduction from the more than $1.5 million in contempt fines the crypto operator racked up over the course of months-long legal proceedings.
Under the terms of the agreement, the City agrees to set aside a temporary restraining order (TRO) and a contempt order, related to the TRO. The agreement calls for US Bitcoin to drop any pending legal action it has pending against the city.
In early March, New York State Supreme Court Justice Edward Pace signed a final order directing US Bitcoin to close its Buffalo Avenue operation. That followed weeks of contentious negotiations between city attorneys and the cryptocurrency company over the drafting of an order that would enforce a ruling by another judge who had found US Bitcoin to be in violation of the high-use industry zoning code. city โโpower.
Supreme Court Justice Frank A. Sedita III had ordered US Bitcoin to stop operating its facilities, while city lawyers sought a preliminary injunction to force them to comply with new regulations that govern energy-intensive industries. Pace ruled on Jan. 25 that US Bitcoin was knowingly operating its facility in violation of the order issued by Sedita, finding the company in contempt.
At the time, Pace also ruled that if US Bitcoin continued to operate the facility, he would impose fines of $10,000 a day until February 1, and then increase the fines to $25,000 a day until cryptocurrency mining stopped. The judge imposed the fines, which date back to December 9, because that was the date that Sedita first issued its temporary restraining order directing US Bitcoin to cease operations while the lawsuit seeking the preliminary injunction settled. made its way to the courts.
The specific terms of the agreement include:
โข Limit the facility's noise output to no more than 65 decibels, a level both parties agree would meet the city's new high-energy overlay district.
โข Construction of a โnoise deadening wallโ on the property for the โpurpose of maintaining the sound level of your operationโ as required by the city's overlay district rules.
โข Work with the city to select a โthird partyโ, an โindependent monitorโ who would be responsible for ensuring compliance with the city's noise level standards.
โข Submit complete applications for all "permits, variances and approvals" necessary to comply with the city's new energy-intensive overlay district. The proposed deal caps US Bitcoin costs for "any and all applications" at $100,000.
In addition to a $50,000 up-front, good faith fee, the agreement also requires US Bitcoin, within 30 days of the effective date of the agreement, to pay the city a $100,000 "compliance fee" with in order to "demonstrate US Bitcoin's commitment to resolve all currently existing disputes between the parties."
The settlement would also require US Bitcoin to reimburse the city for "attorneys' fees and costs" tied to its enforcement action against the company. The reimbursement amount listed in the agreement is $180,000.
Speaking ahead of the Council's action, Bryan Maacks, who lives near Bitcoin's US facility, expressed some reservations about the deal.
โI am a victim of annoying bitcoin noise,โ Maacks said. "What does quality of life mean to you? How would you feel if the comfort of your home was taken away from you?"
