A Wyoming Bitcoin company will receive $4.1 million in the fallout of its 20-month lawsuit against a Chinese-owned cryptocurrency mine that President Joe Biden and the Committee on Foreign Investment in the United States (CIFIUS) ordered shut down and sold in May, an extremely rare divestment order for the American government to make.
Bison Blockchain settled its lawsuit with a conglomerate of Chinese cryptocurrency companies in October that had forced out the Wyoming company from participating in the crypto blockchain mine that was set up 1.3 miles away from F.E. Warren Air Force Base and across the street from a Microsoft facility in Cheyenne. It was the proximity to the military base that prompted Biden to order the blockchain mine to close as a national security risk.
In November, the U.S. Department of Treasury moved to limit businesses like foreign-owned crypto mines from locating near sensitive locations.
Sean Murphy, a former Bison Blockchain staffer, said the settlement transcends the cryptocurrency industry and speaks to the high-tension economic and national security relationship between America and China on topics of rare earth minerals, tariffs and spying.
“Under tariffing pressure, they’re (the American government) going to start to find ways to tighten these up or find workarounds, so their companies aren’t tariffed,” Murphy said.
What’s It About?
A blockchain mine has nothing to do with the mining of fossil fuels and is most comparable to a data center. Blockchain mining is the process of adding transaction records to the Bitcoin blockchain.
In May 2023, Bison Blockchain filed a $22 million lawsuit in Wyoming federal court against five companies based in either Delaware or the Cayman Islands related to its Bitcoin mines in Cheyenne. The lawsuit accused the companies of breaching contracts, covenants of good faith and fair dealing and enterprise liability. The suit also accused the companies of intentionally interfering with contractual relations.
Bison Blockchain alleged that about eight “corporate entities” run by Chinese nationals with varying levels of connections to companies in China — including the largest manufacturer of Bitcoin miners in the world — had pushed the Wyoming-based company out of a five-year service agreement it had earned with Black Hills Energy for two different bitcoin mining sites near Cheyenne.
When Bison Blockchain entered into business with these companies, Murphy said, they had no idea they had any connections to China and were only told they were “international investors” before discovering the real truth later. If they had known of the connection, he said, the project would have likely never moved forward.
“It would’ve been massive hesitation and meant that we would have changed the deal entirely,” Murphy said. “We would've required that we would’ve owned the site, the land, and held the power contract. If we had required that they would’ve said ‘no deal.’”
Getting any money in the settlement, Murphy said, was a significant achievement. Murphy said U.S. District Court Judge Johnson’s decision in June to award Bison Blockchain a meritorious claim for relief proved to be extremely significant as it laid the groundwork for the eventual settlement agreement. Without this award, Murphy said their lawsuit would have been killed without getting a single penny of reimbursement.
“It was a big thing that the court did, but it only did it because it thought we had a good claim,” he said.
The two Bitcoin mines were sold by Chinese-affiliated company MineOne to Las Vegas-based CleanSpark for a price of $22.5 million in August. This purchase included the valuable up to 75-megawatt power contract for two sites, informally known as the Campstool substation, through Black Hills Energy.
“They were buying the power (electricity), the power to have a Bitcoin mine,” Murphy explained.
These sites would have raised millions of dollars of profits for Bison Blockchain and employed 15 people locally.
Murphy believes CleanSpark was already working with MineOne to purchase the mine even before Biden ordered it to be sold.
Although Murphy was optimistic about CleanSpark being the new owner of the mine, he said he was disappointed to see that CleanSpark, an American company, sent $1.3 million money to “clear the North Range site” at a critical juncture in the lawsuit settlement negotiations.
“I have serious concerns about CleanSpark and how they helped the Chinese in the litigation against a small, local Bitcoin miner,” Murphy said. “It’s more of a concern in the way that I watch the $1.3 million go to the Chinese’s lawyers. It was well-thought out, they knew they needed the money.”
CleanSpark did not immediately respond to Cowboy State Daily’s request for comment.
Out of a pool of $15.5 million available from the sale, Bison Blockchain was able to negotiate the settlement agreement price.
Although $4.1 million may seem like a major windfall, Murphy said, this still isn’t what his company deserved. Bison Blockchain was significantly hindered by CleanSpark’s contribution, he said.
CleanSpark Concerns
CleanSpark CEO and President Zach Bradford told the Wyoming Legislature in September his company has invested more $25 million in its Cheyenne properties and expects to invest an additional $40 million to $50 million in infrastructure, such as substations, over the next three to six months at both their properties. After that, he said they will designate at least another $100 million for servers. He estimates these projects will create nearly 40 jobs between their two properties.
Murphy said despite the required divestment, CleanSpark has purchased Chinese bitcoin mining computers for the project at a cost of around $600 million.
“Everything that was sent packing is now all coming back,” Murphy said.
State-Level Ramifications
As far as Bison Blockchain’s future, the company is no longer active.
Bison continues to maintain a 10-year state land lease near the Campstool substation but the purpose of that lease is for a “Bitcoin Mining Site only.” Bison is still trying to work with the state and American Bitcoin miners in developing the land.
When Bison Blockchain began developing the Campstool Bitcoin mining site, the plan had always been to use electrical power from the Campstool substation to power Bitcoin mining machines, from which the state of Wyoming would receive a per-machine royalty under a Special Use Lease.
Murphy said CleanSpark hasn’t shown any interest in working with Bison Blockchain on this land.
“With what’s happened now and with CleanSpark coming in, that looks like to be not happening,” Murphy said. “They’ve really given us the ultimate cold shoulder.”
Leo Wolfson can be reached at leo@cowboystatedaily.com.
