Why this Montana crypto miner refuses to pay a $3.7M power bill

Project Spokane, a Montana-based mining firm that has been sued by tribal-owned electricity company Energy Keepers Inc. for $3.7 million in unpaid power bills, claims the debt is not its responsibility.

On Dec. 14, Project Spokane requested that a Montana federal judge nix the lawsuit, asserting that Hyperblock LLC — a company that purchased most of the mining firm’s assets in 2018 — is liable for the debt.

However, Hyperblock declared bankruptcy in March following the onset of the COVID-19 pandemic. Project Spokane and Hyperblock share an owner.

The suit, which was filed by Energy Keepers, or EKI, in May, alleges that Project Spokane used its deal with Hyperblock LLC to conspire against paying the power provider for the electricity it consumed.

The complaint notes that Hyperblock purchased Project Spokane’s assets for nearly $66 million despite the firm holding jus$11 million in assets and $6.6 million in liabilities, claiming that the sum paid was excessive given the state of the miner’s books.

Project Spokane claimed that the terms of the deal with Hyperblock explicitly shifted responsibility for its energy bill to Hyperblock. The defendants noted that EKI returned a $1 million deposit and issued a $5 million unsecured credit limit to the firm, emphasizing that EKI had determined Hyperblock was legitimate after extensive interaction with, and research into, the firm:

“EKI approved the assignment of the contracts with its eyes wide open. For EKI to now allege that defendants used Hyper LLC to abuse the corporate form and perpetrate a fraud is disingenuous and patently false given that EKI was well aware of these same facts,” said the defendants

“Simply put, there is no evidence that either PS or Walsh used the corporate cloak of Hyper LLC to defeat public convenience, justify wrong, perpetrate fraud or defend crime.”

The plummeting Bitcoin price amid the “Black Thursday” crash in March was cited as the reason for Hyperblock’s failure to continue paying its bills — prompting EKI to cease providing electricity to Hyperblock on May 14. Hyperblock filed for bankruptcy one day later.