gawsuit

The reason for that is that it turns out that paying for power and cooling is more expensive than not.

I've followed this one with amusement for a while. Basically they tried to be legitimate in a sense, until that turned out to be quite expensive, at some point they tried again to be legitimate but again with the same result. There's lots of history you can read up about in the Bitcointalk thread (1500 pages of it), including details like the CEO causing tens of thousands of dollars of damage to a rental property by amongst other things, running a mining operation in his basement.

At one point they made a large mining facility in the US, with contracts with the power company to use a certain amount of service. They paid in the millions of dollars for mining hardware and power installation for their own small substation, they then ran it for a few months until the power company cut them off for never paying the power bill which amounted to $350,000 USD[1]. This was responded to as "a billing dispute" [2].

From my own calculations this farm was never able to be profitable (it always used more in power than it mined), and never covered even a small portion of the hashrate they were supposed to own. At one point they posted a video from within it, filmed without sound and in such a way as to hide the fact that there was only one rack of miners.[3] Many promotional photos were posted of their "farm", but none of the hardware is actually plugged in for these photos, so it was probably reboxed and shipped to customers afterwards.[4]

The part not mentioned in the SEC complaint is where the CEO flees the US to Dubai, one of the people in Dubai he defrauded of $200,000 from wins a legal battle against him, and the US Government bails him back to the US.

[1] http://www.scribd.com/doc/261395976/Mississippi-Power-vs-GAW...

[2] https://www.cryptocoinsnews.com/wp-content/uploads/2015/04/1...

[3] https://www.youtube.com/watch?v=2ZpZdeJNSV0

[4] https://i.imgur.com/9YTH5mB.jpg