Dec. 6—Attorneys for the city of Niagara Falls have filed an action in State Supreme Court seeking to shutdown three cryptocurrency mining operations in the city "unless and until" they comply with a recently enacted series of amendments to the city's Zoning Code that govern the location and operation of high-energy use industries such as data centers and crypto-mining facilities.
The summons and complaint charges U.S. Data Technologies Group Ltd., U.S. Data Mining Group Inc, doing business as U.S. Bitcoin and 2747 Buffalo Avenue LLC, with engaging in "ongoing violations" of the city's Zoning Code and creating a "public nuisance" as a result of those violations.
The legal action was authorized by the Falls City Council at a meeting Nov. 2. The lawsuit was filed on Nov. 16.
In a letter to the council seeking to file the suit, Mayor Robert Restaino wrote that "the city has worked to create a path forward for cryptocurrency and data centers." However, Restaino wrote, "several companies, which have never been in compliance, are operating in violation of long-standing zoning and building codes and creating potentially dangerous public nuisances."
All three crypto-mining companies had received letters, in November and December 2021, from the city's Department of Code Enforcement, advising them that they were in violation of the city's Zoning and Building codes and demanding that they "cease and desist" their operations until they were in compliance.
On Sept. 8, the council, on a 4-1 vote with Council Member Donta Myles opposed, approved the new high-energy use amendments to the Zoning Code.
The zoning code amendments had been approved and recommended to the council by both the Niagara Falls and Niagara County planning boards.
City residents living near the three crypto-mining operations have flocked to a public hearing on the Zoning Code amendments to demand action on what they described as unreasonable noise.
"At the beginning of the year my home was invaded, by noise. It has changed my life. It is constant, 24 hours a day," said Bryan Maacks, who lives near the U.S. Bitcoin facility inside what had been an abandoned industrial plant on Buffalo Avenue. "I'm here for myself and my mental health."
In addition to the three bitcoin mining facilities that are subject to the legal action, two to three more crypto facilities are reportedly seeking to establish operations here.
The suit is being handled by the city's outside legal counsel for zoning-related matters, Dan Spitzer and Joel Terragnoli of Hodgson Russ LLP and Edward Perlman of Magavern Magavern Grim LLP. None of the attorneys would comment on the lawsuit, but Spitzer has previously made clear the city's position on the siting of high-energy use industries.
"Cryptocurrency mining and data centers are currently illegal in the city," Spitzer has said. "But we are working with the industry to establish (rules) that would allow them."
The new Zoning Code amendments restrict high-energy use facilities, like data centers and bitcoin mining operations, to locations that are zoned only for industrial uses. The amendments also act as a so-called "overlay" to the city's current industrial zoning requirements and add new restrictions that require larger set-backs of the high energy use facilities from their neighbors.
The changes also impose strict limits on noise generated by the high energy use operations.
Representatives of the three operators named in the legal action had previously asked that their facilities be exempted from the new Zoning Code requirements. It was not immediately clear who will be representing the crypto-mining companies in the law action.