A rural community in Hood County is set to vote next week to become Texas’ newest city – but a lawsuit filed by the owner of a nearby Bitcoin mine could block them.
For months, residents of Mitchell Bend outside of Granbury have been campaigning to incorporate, and by doing so, try to regulate the Bitcoin mine they say has been causing them serious health problems for years.
The mine, owned by Marathon Digital Holdings, or MARA, was built in 2022. Since then, residents have complained about constant noise pollution from the fans needed to cool the massive computers in the facility.
“All of these people in this area have varying degrees of issues – dizziness, nausea, vertigo, motion sickness,” said Cheryl Shadden, who runs the Facebook group Bitcoin Noise Hood County and works as a registered nurse anesthetist.
She and others say incorporation is their only remaining option to address the problem. But on Tuesday, MARA filed a lawsuit in the federal Northern District of Texas calling the ballot initiative "illegal."
"This case is about an intentional and unconstitutional use of local government authority to favor a small group of citizens and violate the constitutional rights of others," reads the lawsuit.
A spokesperson for MARA wrote in a statement to KERA that the company filed the suit because the incorporation effort "serves no lawful or legitimate purpose."
"It seeks only to target specific businesses —including MARA — with punitive taxes and restrictive ordinances, which is contrary to the principles of fair and lawful governance," read the statement.
The lawsuit names Hood County, Commissioner Ron Massingill, county attorney Matt Mills and county election administrator Stephanie Cooper as defendants. KERA reached out to the Hood County attorney's office for comment on MARA's lawsuit in federal court and will update this story with any response.
Shadden told KERA that MARA's lawsuit against incorporation is interfering with residents' right to vote.
"If they mitigated and mediated with the community, we wouldn't be in this situation," Shadden said. "What else are we going to do when industry harms this community nonstop and refuses to mitigate? What else do we have but lawsuits and incorporation? That's where we're at."
The path to incorporation
Shadden said she and her community have tried various avenues to address their concerns, including testifying at Texas Senate committee hearings and Hood County Commissioners Court meetings. She’s also a plaintiff in three lawsuits against the mine and an adjacent power plant, including one suit represented by the climate advocacy group Earth Justice.
“We can't get help from our senator, we can get help from our house representative,” Shadden said. “We've boiled it down now to lawsuits and incorporating as a town.”
KERA has reached out to Rep. Shelby Slawson and Sen. Brian Birdwell, who both represent Mitchell Bend in the statehouse, and will update this story with any response.
Nannette Samuelson, commissioner for Hood County’s 2nd precinct, which includes Mitchell Bend, told KERA the county court had passed a resolution asking the state legislature to give counties authority to regulate noise pollution.
“None of that was done,” Samuelson said. “It's up to the citizens to vote on it if they do want to be able to do that.”
MARA alleges in their lawsuit that Hood County officials and residents kept the incorporation secret "to avoid public discussion or opposition."
Shadden countered that MARA's attorneys were well aware of the incorporation effort going back as far as August. It has also been in the public discussion since April.
"We've had, you know, up to five town hall meetings and publicized all over social media that we were discussing incorporation as a type B municipality," Shadden said. "How secretive is that?"
What happens if residents vote 'yes'
If 250 Mitchell Bend residents vote to incorporate, it will be one of Texas’ newest cities, with an area of roughly two square miles and a population of about 600.
But the ballot initiative to incorporate has become a contentious issue among residents and elected officials. During an August meeting, Hood County Judge Ron Massingill said he threw out a ballot petition signed by several dozen residents calling for an election to incorporate as a city.
Residents say Massingill’s action was in direct response to a letter sent by attorneys representing MARA asking the Hood County court to “vacate” the petition, saying it didn’t have enough valid signatures.
Shadden said that was the first instance of election interference by an out-of-state company that "has no standing" in local elections.
“They had to go through and redo it, which was extra work and probably not necessary,” Samuelson said. “The main thing is that it's going to be on the ballot, people are going to get to choose, you know, vote for what they want for their lives.”
The question will still be on the Nov. 4 ballot, but residents have been receiving pamphlets from an Iowa-based organization called the National Landowners Federation Action Fund (NLFAF) asking them not to vote for incorporation.
“All of this to try to stop incorporation and everything they're doing they're not telling the truth,” said Danny Lakey, who can see and hear the Bitcoin mine from his back porch.
KERA has reached out to NFLAF and will update this story with any response.
Lakey said if Mitchell Bend incorporates as a city, he would run for mayor to enact a noise ordinance similar to one in Houston.
“If we're incorporated, I guarantee you they will either shut down, move away, or do something to control the noise on their property,” Lakey told KERA.
Crypto company pushes back
MARA's spokesperson said in the company's statement to KERA that it believes the incorporation effort is "contrary to the principles of fair and lawful governance."
"We believe municipal incorporation should serve the genuine needs of communities, not be used to target or weaponize the process against law-abiding businesses," read the statement.
The company added it’s committed to creating jobs, supporting local communities and "being good neighbors."
"We have invested millions of dollars to enhance the Granbury site since acquiring it in 2024, including transitioning the vast majority of the site to immersion cooling, and completing construction of a sound wall around the facility," read the statement.
Meanwhile, residents like Lakey and Shadden said they're not opposed to big industry in Texas, but the costs to their health and property are just too high. Lakey said he doesn’t think MARA is living up to its "good neighbor" claim.
“I don't want to incorporate, I just don't have a choice. If we don't do this then I'm going to suffer until we die. I mean, it's just that simple,” Lakey said. “I fully support all the things that our state wants to do – I just don't want you to be a bad neighbor doing it.”
Shadden told KERA on Tuesday that she was getting ready to file a complaint against MARA's lawsuit with the Texas Secretary of State.
"What [they're] saying is that Marathon is the only industry in the state of Texas that can't function in an incorporated area," Shadden said. "The attempt to incorporate is to try to protect the community from industry that has no concern for us at all."
Pablo Arauz Peña is KERA’s growth and infrastructure reporter. Got a tip? Email Pablo at parauzpena@kera.org.
KERA News is made possible through the generosity of our members. If you find this reporting valuable, consider making a tax-deductible gift today. Thank you.
