BTC Expert Witness Services

Behind the Crypto. Expert witness for attorneys handling ASIC mining and hosting disputes. Litigation and AAA arbitration.

[BTC Expert Witness Services @BTCExpertWitnes]

I help attorneys win crypto hosting disputes.

ASIC mining. Hosting contracts. Data center operations. When a case turns on how the machines and the deals really work, I make it clear for a jury.

Five depositions. One $15M defense verdict.

https://t.co/u59FPJSkMS

[BTC Expert Witness Services @BTCExpertWitnes]

Firmware is a quiet source of hosting disputes.

Underclocking raises efficiency and lowers hashrate. Overclocking does the reverse and can void warranty coverage.

Who is allowed to change firmware, and what performance floor applies, belongs in the contract. It almost never is.

[BTC Expert Witness Services @BTCExpertWitnes]

Hot and cold air separation is a contract issue, not just an engineering one.

If hot exhaust recirculates into the intake, machines throttle, hashboards fail early and uptime drops.

Then the fight is over whose fault it was. It is still the most common physical cause I see.

[BTC Expert Witness Services @BTCExpertWitnes]

The records a hosting site should keep, from someone who has been asked to reconstruct them under oath.

Interval meter data at the site level and, where possible, at the container or PDU level. Retained for the life of the contract plus the statute of limitations.

Summarized monthly totals are not evidence. They are conclusions.

Per machine uptime and downtime with reason codes.

Curtailment. Grid event. Firmware. Hashboard failure. Overheat. Maintenance. Customer request.

Reason codes are what let you defend a downtime claim two years later.

Curtailment logs with start time, end time, who ordered it, and the authority for it.

If a grid operator called it, note the instruction. If the host elected it economically, say so.

Pool side payout records in the customer's name, downloadable by the customer.

If the customer cannot independently verify their own production, you will be arguing about your own dashboard.

Monthly reconciliation. Bitcoin mined, pool fees, host fees, power billed, bitcoin remitted, with wallet transaction identifiers.

Environmental data. Inlet and outlet temperature, humidity, differential pressure.

I have handled a hashboard failure analysis where the thermal record was the difference between a warranty claim and an operations claim.

[BTC Expert Witness Services @BTCExpertWitnes]

Most hosting lawsuits are not caused by bad faith.

They are caused by two parties with different records of the same month.

Fix the records and you prevent most of the litigation.

[BTC Expert Witness Services @BTCExpertWitnes]

A 2016 federal consumer protection settlement over mining hardware is still the cleanest benchmark I know of.

No advance payment unless delivery happens within thirty days, with refunds when it does not.

It binds one company. Most operators still do not meet it.

[BTC Expert Witness Services @BTCExpertWitnes]

Recruiting compensation shows up in nearly every mining fraud matter I reviewed for this series.

If a hosting company pays you to bring in other customers, you are not a customer.

You are a distribution channel for something that probably needed to be registered.

[BTC Expert Witness Services @BTCExpertWitnes]

Red flags a hosted customer can spot before wiring money. Every one of these is drawn from a real filed case.

No machine level serial numbers tied to your account.

A jury convicted a mining company founder in late 2025. He had sent clients photos of other customers' machines and serial numbers tied to entirely different miners.

Site visits only with escort and prior approval.

The SEC pleaded exactly that as evidence investors had no possession or control.

Sales pace that outruns any plausible procurement schedule.

Multiple matters involve operators selling capacity far beyond what they had energized. A public capacity ledger, megawatts energized versus contracted versus available, makes that visible instantly.

Dashboard earnings that are modeled instead of reconciled.

Ask one question. Does this number come from the pool API, or from a formula?

In the largest cloud mining prosecution in the country, the dashboard reflected falsified data.

Rewards that accumulate in the operator's wallet instead of sweeping to yours.

And any withdrawal friction at all. Delays, fees, errors, forced conversion into a house token. Those appear in nearly every fraud matter I reviewed.

Any guaranteed, fixed or daily return.

Mining revenue is stochastic and difficulty adjusts. A guaranteed number is a promise the operator has to fund from somewhere.

Usually from the next customer.

[BTC Expert Witness Services @BTCExpertWitnes]

Publish the inputs. Never the output.

Hashrate. Uptime. Power cost. Fees. Curtailment hours.

Let the customer model the return themselves.

Put a payback period in a sales deck and you are one bad quarter from arguing whether it was a projection or a promise.

[BTC Expert Witness Services @BTCExpertWitnes]

Four operating decisions that lower your securities risk:

• Let the customer choose the pool, in writing
• Charge fixed fees, not a share of profits
• Never pool rewards, sweep to a customer address
• Never quote a return

None is a safe harbor. All four are in your control.

[BTC Expert Witness Services @BTCExpertWitnes]

Whether a hosting deal is an investment contract has been in front of six different tribunals now.

None of them decided it on a full record. But the pattern is clear enough to work from.

Start with the ones pointing toward securities.

A Utah federal case survived a motion to dismiss in September 2024. The SEC alleged the hosting agreement said the promoter would be "doing all the work," and that buyers were told the boxes made $100 a month.

An SEC action filed in Delaware in December 2025 alleged the hashrate was pooled, rewards sat in promoter controlled wallets, and investors had no possession or control and could not visit the site unescorted.

State regulators in Washington and California reached the same conclusion on the same company years earlier. Washington quoted the company telling customers they did not need to do anything about setup or maintenance.

That sentence is close to a confession.

Now the other side. In November 2024 a Delaware federal judge held it was plausible that this same product line was not a common enterprise at all.

Why? Individually leased hardware, and a customer right to point it at any pool, including a competitor's.

A Connecticut jury reached a similar result in 2021 on cloud mining products. In June 2022 the judge let that stand for the mining product, but ordered a new trial on the company's token.

Pool choice and fixed fees carried the mining side.

So five things move a hosting deal toward the line, and an operator controls all five.

• Whether a return is quoted
• Whether rewards are pooled
• Who holds the coins
• Whether the customer picks the pool
• Whether you market that you do all the work

None of this is a safe harbor. The tests differ by circuit and the analysis is fact specific.

But if you are an attorney evaluating one of these deals, those five are your first document requests.

[BTC Expert Witness Services @BTCExpertWitnes]

The clearest rule I can give a hosting operator:

The hardware is never the security. The promise attached to the hardware is.

Every enforcement action I have reviewed turned on a promise, not a machine.

[BTC Expert Witness Services @BTCExpertWitnes]

Hosts: here is how you end up an unsecured creditor in your own customer's bankruptcy, and how to avoid it.

Your customer stops paying. You keep the machines running because you do not want to be accused of self help. Reasonable.

Then they file. Now you are owed money by an estate, and the automatic stay bars you from using that debt as leverage.

What you should have had before any of that.

A power deposit sized to thirty to sixty days, replenished monthly, drawable without notice.

You are not a bank. Stop extending unsecured credit for electricity.

A perfected security interest in the hosted machines and in the mined output, filed against the customer.

That makes you a secured creditor entitled to adequate protection instead of an unsecured one arguing about administrative status.

Contractual and unilateral curtailment rights for unpaid current charges.

Not termination. Curtailment. The ability to stop the bleeding without a court order and without touching prepetition debt.

And a stipulation on how postpetition services will be treated, obtained early in the case.

None of this is exotic. It is standard secured lending practice applied to a business that mostly does not use it.

[BTC Expert Witness Services @BTCExpertWitnes]

Timing is the whole game in a hosting collapse.

The automatic stay protects you from what your host does after it files.

It does nothing about what your host did the day before.

In one Texas matter, the lights went out nine months before anyone filed anything.

[BTC Expert Witness Services @BTCExpertWitnes]

The four losses a hosted customer suffers, in order of likelihood:

1. The deposit. Always unsecured.
2. The prepayment. Always called non refundable.
3. The contract economics. Rejected or sold around.
4. The machines. Usually recoverable, at your cost, on the estate's clock.

[BTC Expert Witness Services @BTCExpertWitnes]

Prepayment is the second thing a hosted customer loses. Here is the case that shows it.

In October 2021 a mining company signed what was publicized as the largest single hosting deal in its host's history. Seventy thousand machines.

By January 2022, about 300 machines had actually been delivered.

The customer could not source the fleet. Its affiliate prepaid a different supplier $10 million for substitute machines. That equipment never materialized either.

The customer had already prepaid its host roughly $35 million.

The host's position was that the prepayments were non refundable.

The host had also built for seventy thousand machines that did not exist. In late 2023 it filed an adversary complaint alleging over $100 million in construction expense and lost hosting revenue incurred in reliance on that commitment.

The two related claimants' combined $34 million in claims were allowed at $10 million, days before the host emerged from Chapter 11.

Both sides lost badly on a deal that never physically happened.

Two fixes, one on each side.

Customer: draft the prepayment as a credit against future services with a refund waterfall, and escrow it.

Host: never build capex against a delivery commitment without a letter of credit or a perfected lien.

[BTC Expert Witness Services @BTCExpertWitnes]

Contract rejection in Chapter 11 is not rescission.

If your host rejects the hosting agreement, you keep title to your machines and you get a prepetition unsecured damages claim.

You do not get your contract price back. You do not get your deposit back. You get a claim.

[BTC Expert Witness Services @BTCExpertWitnes]

Compute North filed Chapter 11 in September 2022. It held roughly $700 million of customer owned equipment for about 84 clients across hundreds of containers.

Almost none of those customers lost their machines. Many of them lost everything else.

Here is the mechanic that most people get wrong.

It sold the buildings, the power rights, the joint venture equity, its own containers and even its monitoring software.

What it could not sell was the customers' machines. Those were never estate property.

So customers woke up as guests of a new landlord who had no obligation to honor their old economics.

Title got you the box back. Title did not get you your deal.

One large public miner had about $81 million of exposure, including roughly $50 million of deposits in the host's account.

All of it collapsed into a single $40 million unsecured claim. Its preferred equity was projected to recover nothing.

Another customer signed a 20 megawatt hosting agreement five weeks before the filing.

It ended up trucking all 6,572 of its machines out of Texas to its own facility in weekly shipments. Self help extraction, not a court remedy.

And this is the part people miss. Getting your machines back is not free.

De racking, packing, freight and reinstallation all land on you, on the estate's schedule. Even the customer who wins takes delivery collect.

More than two years later, the estate's litigation trust sued the executives for breach of fiduciary duty and fraudulent transfer, pointing to an $86 million container purchase made with no sites to put them.

Capacity bought ahead of energized megawatts.

Customer protections that would have changed all of this:

• Deposits capped and escrowed
• A letter of credit instead of cash
• Removal rights with a fixed timeline and cost allocation
• A requirement that any facility buyer assume the hosting agreement

[BTC Expert Witness Services @BTCExpertWitnes]

The asymmetry every hosted customer should understand.

A host that files can reject your contract, sell the site out from under you, and use the automatic stay to stop you from trucking out your own machines.

Your host's bankruptcy reaches your hardware. Plan for it.

[BTC Expert Witness Services @BTCExpertWitnes]

Regulators are now saying no.

A state commission rejected a 250 megawatt mining power deal partly over the risk the site would fail to interrupt when told to.

It approved a smaller one only on condition that market costs be offset dollar for dollar.

[BTC Expert Witness Services @BTCExpertWitnes]

Miners who challenged a crypto specific utility rate class on constitutional grounds lost.

A federal court in eastern Washington held there is no property interest in a low rate. The Ninth Circuit affirmed.

Allocate that risk by contract, or it lands on whoever is silent.