State senator owes $50M in legal dispute over EKY Bitcoin facility
A Kentucky state senator is still responsible for paying a Chinese company more than $50 million in a legal dispute over a failed Bitcoin mining operation in Letcher County, according to federal court documents.
HBT Power, the Chinese company, was awarded $51 million after it sued Mohawk Energy LLC in U.S. District Court for the Western District of Kentucky in November 2023 over wrongful eviction, breach of a license agreement and unlawful retaining of property.
Sen. Brandon Smith, R-Hazard, owns Mohawk Energy. He was an early booster of cryptocurrency; in 2021, Smith championed tax breaks that incentivize mining companies to operate in Kentucky a year before his own company made an attempt to turn an industrial park warehouse into a Bitcoin campus with a repair facility.
The money he and his company are meant to pay HBT Power is an accumulation of attorneys’ fees, damages for lost profits and includes an acknowledgement of whose property is whose.
This month, the Chinese company filed a petition to confirm its payout, a move that attempts to turn the award decided by a third party into a court judgment. If the court confirms, the winning party can use standard court tools to collect what it is owed.
An arbitrator, or a third party chosen to settle legal disputes out of court, conducted a proceeding in which both parties had the opportunity to request documents and information from the other, said Harout Samra, a Florida-based attorney representing HBT Power.
“The whole purpose of the case was to make our client whole,” he said. “Our client invested significant funds, resources, equipment, know-how and time in making this project work. And despite all of that investment — which was made in good faith — Mohawk just simply failed to live up to its obligations in its agreement and the arbitrator concluded as much.”
Smith and Anna Whites, the Frankfort-based attorney representing him, did not immediately respond to requests for comment.
Mohawk Energy and HBT Power business history
The two companies signed an agreement in May 2022 for HBT Power to use Mohawk Energy's warehouse. HBT Power would keep the Bitcoin its machines mined as profit while Mohawk Energy got a share in addition to rent and some of its utility bills paid.
But according to the lawsuit, despite HBT Power's investment in upgrading the facility — including paying for a new electrical substation — Mohawk Energy did not install the proper wiring to service the machines and then attempted to sell them. The two companies disagreed throughout the legal dispute over rent payments, the cost of labor and who owns the specialized computers that were once housed in the warehouse.
Smith’s company joined a wave of other cryptocurrency businesses setting their sights on Eastern Kentucky around 2022.
Cryptocurrency is a digital currency. Its mining operations — where machines solve math problems for a monetary reward — are housed in data centers various enterprises thought would be best suited for Eastern Kentucky where power is cheap, infrastructure is still in place from coal operations and tax incentives made it easy to get started.
With a promise of $46 per hour after just a month of training for its staff, the opening of Mohawk Energy’s facility was applauded in Letcher County, where the decline of the coal industry has reduced economic opportunity and its population. The area was among the worst-hit in the historic, deadly floods of 2022.
A second lawsuit over same operation
Mohawk Energy and Smith are also named as defendants in another lawsuit related to the same project.
The second lawsuit was filed last January in Letcher Circuit Court by Ricky Dale Cole, who alleges Smith grossly inflated the value of Mohawk Energy.
Cole alleges he agreed to sell a warehouse to Mohawk Energy in a deal Smith proposed: sell for below market price in exchange for a 20% stake in the business. Cole said in the suit he’s seen no profit from the deal and has been unable to access information about the company’s finances.
In a counterclaim to the lawsuit, Smith denies nearly all of Cole’s allegations, including terms of the property deal and when and how the two initiated the exchange. Smith’s response also denies Cole has any interest in the company and says his actions are “completely opposed” to the best interest of Mohawk Energy.
According to court documents, discovery requests made in April 2025 by Cole were returned in July, though the case has not moved forward since.
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