A northern Minnesota electric cooperative is going after a couple for their alleged plot to siphon hundreds of thousands dollars' worth of energy for two bitcoin farms.
The civil suit, filed in Lake of the Woods County District Court by North Star Electric Cooperative, claims business owner Ryan Jaenicke of Roseau, Minn., diverted electricity from a nearby high-voltage line to power his cryptocurrency farms.
The electricity was allegedly directed to a house in Roosevelt, Minn., owned by TiMar LLC, a company controlled by Jaenicke's ex-partner, Tina Fehlhaber of Badger, Minn., whom the company is also suing.
Jaenicke has posted about his real estate and cryptocurrency investment endeavors on his YouTube channel, "Degenerate Passive Income," in the last two years.
Said Joel Fremstad, an attorney for North Star: "You can steal electricity for any reason. The cryptocurrency makes this seem exotic — at the end of the day, it's a clear violation of right and wrong."
Officials with North Star, a power distribution company based in Baudette, Minn., noticed last summer it was losing a serious amount of power and began an investigation in 2022 to uncover the problem.
In May, two employees discovered tampering that allowed unauthorized power to connect to the house in Roosevelt, a city of 150 about 25 miles northwest of Baudette. North Star and police officers traced the line to a shed filled with fans, vents and 26 cryptocurrency mining units — specialized computers used to ensure digital currency is legitimate and to bring new bitcoin into circulation.
"We're talking about the amount of power that would be used in a large-scale commercial or industrial facility," Fremstad said.
He added that the energy likely had been siphoned since January 2022, when Fehlhaber's company bought the property, until this May.
According to the suit, Jaenicke unsuccessfully tried to bribe a co-op employee with $2,000 in exchange for upgrading the power fuse by the house. He upped the offer to $5,000 in cash and was rejected again.
Five counts are alleged in the suit, including theft, conversion of property, conspiracy and unjust enrichment. North Star is seeking damages of more than $50,000.
If found liable, Jaenicke and Fehlhaber may face hundreds of thousands of dollars in damages, Fremstad said, as well as payment of thousands in "ill-gotten gains" from using the electricity.
Jaenicke said he was making $5,000 per month in a YouTube video from March of last year. He did not respond Thursday to requests for comment.
The suit refers to Jaenicke's advice to his audience: "Be greedy, when other people are fearful, that is how you make money."
"We're trying to go after him to show greed doesn't pay. We're going to use his own words against him," Fremstad said.
Jaenicke has been open about his two cryptocurrency mining operations, one 90 minutes and another 20 minutes away from his home — in line with the distance between his residence and the property mentioned in the lawsuit.
North Star serves about 6,000 paying members who don't have other electricity options, Fremstad said, and it employs only a few dozen people.
"This dangerous theft is going to have a much more significant impact on North Star than it might have on larger, for-profit companies," he said.
Fremstad added that beyond stealing power from cooperative members, the illegal diversion of power could compromise the safety of first responders who unknowingly enter an energized house.