A company owned by Kentucky State Senator Brandon Smith has been ordered to pay more than $51.5 million to a Bitcoin mining firm after an arbitrator found the company breached a licensing agreement and unlawfully converted the f irm's mining equipment.HBTPower Limited filed a petition May 11 in U.S. District Court for the Western District of Kentucky asking Judge Claria Horn Boom to confirm a final arbitration award against Mohawk Energy, LLC. Court documents identify Smith as the sole member of Mohawk Energy.The arbitration award, issued April 13 by arbitrator Peter K. Rosen, found Mohawk Energy breached an Operation Right License Agreement it signed with HBTPower on May 31, 2022. Under that agreement, HBTPower was to operate Bitcoin mining activities in Jenkins, Kentucky.What the arbitrator foundRosen concluded HBTPower met its burden of proof by both a preponderance of the evidence and clear and convincing evidence that Mohawk breached the agreement.The arbitrator found Mohawk failed to meet several key contractual obligations, including: Misrepresenting that it held a fee simple ownership interest in the Jenkins property at the time the contract was signed Mohawk did not execute a deed for the property until December 7, 2023, more than 18 months after the agreement's effective date; Failing to have a power supply agreement in place on the contract's effective date Mohawk did not execute a power supply agreement until December 19, 2022; Failing to deliver the promised 30 megawatts of power capacity to the site; and Diverting funds HBTPower provided for facility upgrades toward the purchase of the property itself, vehicle purchases, and personal payments to Smith, his spouse, and others.The arbitrator also found that after removing HBTPower from the premises in October 2023, Mohawk unlawfully retained HBTPower's S19-Series mining machines and sold 2,059 M-Series mining machines to third parties without authorization.The award breakdownThe total arbitration award of $51,518,453.30 includes: $46,700,000 in compensatory damages for breach of contract; $600,000 in damages for conversion of HBTPower's mining equipment; $128,125 in prejudgment interest on the conversion damages; $3,531,320.07 in attorneys fees; and $559,008.23 in costs.Mohawk has not paid any portion of the award, according to court filings.Property and injunctionThe arbitrator determined HBTPower retains ownership and exclusive rights to equipment currently located at the Jenkins site, including 2,270 Bitmain Antminer S19-Series mining machines, 14 transformers, a substation, and 14 low-voltage cabinets.Rosen recommended the federal court convert an existing preliminary injunction which bars Mohawk from selling, transferring, or using the mining equipment into a permanent injunction. HBTPower's petition asks the court to do exactly that and to order Mohawk to immediately return all property to HBTPower.Smith's role highlighted in proceedingsThe arbitrator's final award specifically noted that Smith, described in the document as a state senator who works on drafting legislation, is a sophisticated party. The arbitrator rejected Mohawk's argument that Smith lacked legal counsel when signing the agreement, noting Smith admitted Mohawk's general counsel and another attorney reviewed the contract before he signed it.Mohawk's counterclaims including claims for defamation and tortious interference were denied in their entirety. ...read more read less