Bitcoin Mine Operator ‘Eager to Comply’ with Overdue Taxes | WJHL

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JONESBOROUGH, Tenn. (WJHL) – A cryptocurrency mining company at the center of an ongoing lawsuit is trying to collect Washington County property taxes after an investigation by News Channel 11 led the county to uncover that the company had not filed a tax card for 2020.

Red Dog Technologies operates a Bitcoin “mine” next to a BrightRidge substation in the New Salem community of Limestone. Red Dog leases land from BrightRidge and uses utility power.

As a private company, Red Dog is responsible for property taxes on what is now determined to be $14 million worth of equipment. Most of it is computer equipment – ​​the bitcoin “mining” machines themselves – that solve complex equations in a race to “unearth” new bitcoins.

Red Dog spent nearly $14 million in personal assets at its Bitcoin mine in Limestone according to tax records.

“My client is very eager to comply with his tax obligations…” Shannan Cuddy, an attorney in the Boston office of BakerTilly, wrote in a Feb. 21 email to Cody Goins, a Washington County assistant real estate appraiser responsible for personal property taxes.

According to a Feb. 28 tax card, Red Dog had a total personal property assessment of $7,456,631 in place at the end of 2021, an amount that takes depreciation into account. The tax on that, due this year, is just over $48,000.

Late taxes on 2020 values, which would have been due last year, are expected to be approximately $24,000 if Red Dog uses the same depreciation method as for its equipment installed in 2021.

News Channel 11 inquired in early December about the value of Red Dog’s personal assets after the company said in a lawsuit that it was “fully operational” in November 2020. That would have made Red Dog liable for taxes of 2020 on personal property he owned. in service by December 31, 2020.

Red Dog has been added as a defendant in the county’s lawsuit seeking to shut down the mine, claiming it is not an approved use under zoning designation A-3 (agricultural business) . This lawsuit was originally filed in November against BrightRidge, which originally requested and received the rezoning in February 2020.

That lawsuit came months after New Salem residents complained about excessive noise from the mine in mid-May. This led County Planning Director Angie Charles to discover that a private company, not BrightRidge, was operating the mine and no permit had been granted for the operation. Charles later determined that the use violated zoning, but commissioners were not aware until September that she had recommended to County Mayor Joe Grandy in late May that a closing order be sent to BrightRidge.

Reveal tax delinquency

Emails obtained in a public records request show that the Office of the Property Appraiser began checking the deal and any potential tax liabilities around December 13 – six days after News Channel 11’s first request for information on Red Dog’s personal property.

Goins documented that another assistant assessor called him that day about Red Dog and GRIID, the company that owns Red Dog. The other appraiser “wanted to know if we had collected them (had put them on the tax rolls) and when told no, they asked why we hadn’t,” Goins documented in an email to himself on December 15.

Goins wrote that he called the county clerk’s office the same day to see if Red Dog or GRIID had a business license, which they did not. Real estate appraiser Scott Buckingham told News Channel 11 in December that the county typically adds new businesses by checking business licenses. He added that when his office inquired about construction at the site earlier in 2021, they were told it was a BrightRidge project, which would be tax exempt.

Goins contacted a Red Dog representative in early January and heard from Cuddy for the first time on January 18. She wrote that Red Dog “recently engaged me to understand their tax footprint in the states, including Tennessee.”

Noise abatement efforts, including the construction of a fence, were underway Sept. 24 at a Bitcoin mine in rural Washington County, Tennessee.

BakerTilly’s analysis had uncovered what had already been reported on December 21: “that my client should have filed a personal property tax schedule for 2021 which should have been filed by March 1, 2021.”

For the first time, Cuddy also noted that Red Dog was “eager to comply”. She wrote that Red Dog was working with BakerTilly to prepare the 2022 and 2021 schedules (for 2020 and 2021 values).

Just over a month later (February 21), Cuddy emailed Goins to say that the property tax schedules, which show the value of all taxable personal property by item, were ready. to be sent.

It was the email noting that Red Dog was “very eager” to come into compliance and wanted to expedite the process of identifying taxes due from the 2021 schedule (for equipment in place in 2020).

“We respectfully request any assistance in mitigating any penalties that may be due,” Cuddy added.

The bulk of the taxable personal property of the 2021 $8.6 million consists of “mining” equipment. Submitted documents show that Red Dog was billed $6,250,000 on November 30, 2021 for 1,000 “miners”. The filing lists them as M31S miners with a “terrahash” rate of 80 per second, meaning each can perform 80 trillion “hashes” per second – the calculations essential to mining Bitcoin.

The fans that keep these machines from overheating are noisy and initially led to the complaints. The tax sheet also shows that Red Dog paid about $185,000 for the soundproofing in August and over an additional $96,000 for the “silent fence” and installation in October and November.

Before county commissioners allowed Charles to order the mine closed in September 2021, Red Dog and BrightRidge had worked to find ways to mitigate the noise.

Chancellor John Rambo is due to decide on March 14 whether the use violates the zoning ordinance. If he rules in favor of the county, a two-day jury trial is scheduled for March 15-16. Grandy, Charles and planning office worker Chris Pape are among those subpoenaed to testify.

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