Constructive Eviction By Cutting Off Power to a Bitcoin Mining Company?

Bitcoin Mining, image by DALL-E

Cheetah Miner, USA (Cheetah) runs a Bitcoin mining business, requiring "significant electrical capacity."  It entered into a five-year lease in a large industrial building.  Less than a year later, the parties were in discussions to terminate the lease.  Cheetah alleged that its landlord, 19200 Glendale, LLC (Glendale) cut off its electricity by transferring the account to itself and that this action constituted constructive eviction in violation of Michigan's anti-lockout statute.  Without access to electricity, Cheetah could not mine Bitcoin, so major buzzkill.  Cheetah sued, seeking an injunction ordering Glendale to restore its electricity.  Shocking.

In May, in Cheetah Miner USA, Inc v. 19200 Glendale, LLC, the District Court denied Cheetah's motion for injunctive relief.  In October, the Sixth Circuit affirmed in an unpublished opinion.  Cheetah Miner faced two major obstacles to the likelihood of success on the merits. First, as the district court emphasized, although a party can claim constructive eviction when the landlord cuts off electricity, the tenant must vacate the premises, and Cheetah failed to do so.  There is a backstory here that the Sixth Circuit does not explore.  Cheetah sued for breach of the lease, but Glendale claimed that Cheetah had breached first, by not paying its rent or its utilities, among other things.  While the district court did not determine which party was in breach, the unsettled nature of the dispute did not speak in favor of injunctive relief.  

Second, while Cheetah claimed irreparable harm, as it must, it sought money damages, which of course would not qualify as irreparable harm.  In its reply brief on its original motion, Cheetah alleged that it would suffer reputational harm caused by loss of customer goodwill through being put out of business.  The district court found that claim speculative, and the Sixth Circuit agreed. 

I'm so curious to know who are the customers for a Bitcoin operation.  Don't you mine Bitcoin so that you have Bitcoin?  If you mine it to sell, don't you just sell it at the market price for Bitcoin?  Why can't your customers buy their Bitcoin elsewhere at the same price.  In any case, the Sixth Circuit expressed skepticism about Cheetah's claims of reputational harm.  It did not file its motion for a preliminary injunction until sixty days after its power was cut off.  If it was out of business for two months, how would the grant of an injunction restore its reputation.  

Finally, Cheetah faulted the district court for not holding an evidentiary hearing at which Cheetah could establish its irreparable harm.  The Sixth Circuit got quite salty with Cheetah at that point.  "[I]t was Cheetah Miner’s job to establish a likelihood of irreparable harm, not the district court’s."  That's a high voltage diss right there.