diff --git a/ethchain/state_manager.go b/ethchain/state_manager.go
index 9fe485b7a..8b56d65bb 100644
--- a/ethchain/state_manager.go
+++ b/ethchain/state_manager.go
@@ -104,7 +104,7 @@ func (sm *StateManager) ApplyTransactions(state *State, block *Block, txs []*Tra
 	}
 }
 
-func (sm *StateManager) ApplyTransaction(state *State, block *Block, tx *Transaction) {
+func (sm *StateManager) ApplyTransaction(state *State, block *Block, tx *Transaction) error {
 	// If there's no recipient, it's a contract
 	// Check if this is a contract creation traction and if so
 	// create a contract of this tx.
@@ -115,10 +115,10 @@ func (sm *StateManager) ApplyTransaction(state *State, block *Block, tx *Transac
 			if contract != nil {
 				sm.EvalScript(state, contract.Init(), contract, tx, block)
 			} else {
-				ethutil.Config.Log.Infoln("[STATE] Unable to create contract")
+				return fmt.Errorf("[STATE] Unable to create contract")
 			}
 		} else {
-			ethutil.Config.Log.Infoln("[STATE] contract create:", err)
+			return fmt.Errorf("[STATE] contract create:", err)
 		}
 	} else {
 		err := sm.Ethereum.TxPool().ProcessTransaction(tx, block, false)
@@ -126,9 +126,11 @@ func (sm *StateManager) ApplyTransaction(state *State, block *Block, tx *Transac
 		if err == nil && contract != nil && len(contract.Script()) > 0 {
 			sm.EvalScript(state, contract.Script(), contract, tx, block)
 		} else if err != nil {
-			ethutil.Config.Log.Infoln("[STATE] process:", err)
+			return fmt.Errorf("[STATE] process:", err)
 		}
 	}
+
+	return nil
 }
 
 func (sm *StateManager) Process(block *Block, dontReact bool) error {
@@ -184,7 +186,7 @@ func (sm *StateManager) ProcessBlock(state *State, parent, block *Block, dontRea
 
 	//if !sm.compState.Cmp(state) {
 	if !block.State().Cmp(state) {
-		return fmt.Errorf("Invalid merkle root. Expected %x, got %x", block.State().trie.Root, state.trie.Root)
+		return fmt.Errorf("Invalid merkle root.\nrec: %x\nis:  %x", block.State().trie.Root, state.trie.Root)
 	}
 
 	// Calculate the new total difficulty and sync back to the db
diff --git a/ethminer/miner.go b/ethminer/miner.go
index e052d0207..8d6486e90 100644
--- a/ethminer/miner.go
+++ b/ethminer/miner.go
@@ -105,14 +105,14 @@ func (miner *Miner) listener() {
 					miner.block.Undo()
 					//log.Infoln("[MINER] We did not know about this transaction, adding")
 					miner.txs = append(miner.txs, tx)
-					miner.block = miner.ethereum.BlockChain().NewBlock(miner.coinbase, miner.txs)
-					miner.block.SetTransactions(miner.txs)
 				} else {
 					//log.Infoln("[MINER] We already had this transaction, ignoring")
 				}
 			}
 		default:
-			ethutil.Config.Log.Infoln("[MINER] Mining on block. Includes", len(miner.txs), "transactions")
+			stateManager := miner.ethereum.StateManager()
+
+			miner.block = miner.ethereum.BlockChain().NewBlock(miner.coinbase, miner.txs)
 
 			// Apply uncles
 			if len(miner.uncles) > 0 {
@@ -120,8 +120,19 @@ func (miner *Miner) listener() {
 			}
 
 			// Apply all transactions to the block
-			miner.ethereum.StateManager().ApplyTransactions(miner.block.State(), miner.block, miner.block.Transactions())
-			miner.ethereum.StateManager().AccumelateRewards(miner.block.State(), miner.block)
+			txs := miner.txs
+			miner.txs = nil
+			for _, tx := range txs {
+				if err := stateManager.ApplyTransaction(miner.block.State(), miner.block, tx); err == nil {
+					miner.txs = append(miner.txs, tx)
+				}
+			}
+			miner.block.SetTransactions(miner.txs)
+			stateManager.AccumelateRewards(miner.block.State(), miner.block)
+
+			ethutil.Config.Log.Infoln("[MINER] Mining on block. Includes", len(miner.txs), "transactions")
+
+			//miner.ethereum.StateManager().ApplyTransactions(miner.block.State(), miner.block, miner.block.Transactions())
 
 			// Search the nonce
 			miner.block.Nonce = miner.pow.Search(miner.block, miner.quitChan)
diff --git a/peer.go b/peer.go
index 5c46b73fb..7f81489b6 100644
--- a/peer.go
+++ b/peer.go
@@ -381,7 +381,6 @@ func (p *Peer) HandleInbound() {
 				}
 
 			case ethwire.MsgTxTy:
-				fmt.Println("received tx")
 				// If the message was a transaction queue the transaction
 				// in the TxPool where it will undergo validation and
 				// processing when a new block is found