Kentucky State Senator Entangled in Lawsuits Over Failed Eastern Kentucky Bitcoin Mining Venture
Eastern Kentucky has become the focus of a legal dispute involving a bitcoin mining operation tied to a local state senator, following allegations of failed infrastructure and financial mismanagement.
The bitcoin mining project, a partnership between Mohawk Energy, co-founded by Kentucky State Senator Brandon Smith, and HBTPower—a subsidiary of the Chinese cryptocurrency exchange Huobi—was launched in 2022 with hopes to transform a warehouse facility into a thriving cryptocurrency mining site. Mohawk Energy’s mission initially centered around reclaiming lands damaged by coal mining, but the venture marked a shift towards leveraging Eastern Kentucky’s natural resources for digital currency mining.
However, within a short time frame, the venture deteriorated into contentious lawsuits from both parties. HBTPower alleges that Mohawk Energy failed to install critical power infrastructure and secure necessary utility subsidies for the site, which are vital for the energy-intensive process of bitcoin mining. On the other hand, Mohawk countersued, asserting that HBTPower owes significant rent payments and operational costs dating back to the start of their partnership.
These legal battles underscore the fragile nature of cryptocurrency mining operations, particularly in rural regions where infrastructure and regulatory support are limited. The energy demands of proof-of-work bitcoin mining are notoriously high, often driving up costs and requiring substantial subsidization—a point of controversy locally.
Community and Regulatory Pushback
Local utility regulators in Kentucky have recently rejected proposals to extend generous energy price discounts to cryptocurrency mining companies due to concerns about unfairly burdening other customers with higher bills. Such subsidies have been criticized by environmental and public interest groups, including the Sierra Club and the Kentucky Resources Council, for providing limited economic benefits while contributing to energy waste.
Attorney General Russell Coleman has also been vocal in the state’s broader pushback against federal overreach in cryptocurrency regulation, leading Kentucky in a multi-state lawsuit against the U.S. Securities and Exchange Commission (SEC). The complaint argues that the SEC has overstepped its authority by classifying cryptocurrencies as securities, which would impose strict regulations more akin to stocks and bonds.
This regulatory tension at both state and federal levels adds further complexity to the operational landscape of cryptocurrency ventures in Kentucky.
Broader Context of Cryptocurrency in Kentucky
The failed mining operation involving Senator Smith is part of a wider pattern of volatility and legal risks in crypto projects across the United States. While cryptocurrency remains popular among many Americans seeking financial innovation, its energy-intensive aspects and regulatory uncertainty have repeatedly sparked contention.
Moreover, cases such as the recent sentencing of an international crypto vendor for money laundering based out of the Eastern District of Kentucky highlight additional legal risks tied to virtual currencies in the region.
As this legal drama unfolds, the future of cryptocurrency mining in Eastern Kentucky remains uncertain. Industry insiders and policymakers alike are watching closely to see whether mining ventures can overcome infrastructure challenges and community resistance or continue to be plagued by disputes and regulatory pushback.
Disclosure: The information provided here synthesizes ongoing news developments related to cryptocurrency operations in Eastern Kentucky, reflecting court filings, regulatory decisions, and public statements from involved parties up to September 2025.