North Dakota officials are marketing the state as a destination for cryptocurrency companies looking to clean up the industry’s image as a wasteful climate polluter, touting the state as a home for “purest crypto on the planet,
But energy experts say that without specific commitments from companies to power data centers with new wind and solar farms, cryptocurrency mining in North Dakota is likely to run on an energy mix dirtier than the national average.
“To say you’re cleaner because you’re in North Dakota is not really true because the national electricity mix is actually much cleaner than North Dakota’s electricity mix,” said Ric O’Connell, CEO of GridLab, a nonprofit energy organization. political consulting group based in Berkeley, California.
At a bitcoin conference last spring in Miami, North Dakota officials promoted the state’s energy mix as a top selling point for building cryptocurrency facilities in the state, along with its low taxes, minimal regulations and relatively cooler climate, which could reduce the power load required to keep computer hardware from overheating for parts of the year.
Cryptocurrency “miners” are specialized data centers set up to run complex algorithms that mint new digital tokens. The industry has rapidly grown into one of the most energy-intensive in the world — an estimated 150 terawatt-hours of electricity annually, more than the entire country of Argentina, according to a study by the University of Cambridge.
At least three cryptocurrency companies have cited North Dakota’s energy resources in recent project announcements:
- In January, CEO of Atlas Power Data Center, Kevin Washington said in a press release building its largest project yet near Williston would allow it to “draw on a diversified mix of alternative power sources.”
- Applied Blockchain touted its proximity to “significant wind power capacity” last month in a message for a new cryptocurrency mine in Ellendale. In an interview, CEO Wes Cummins said the state’s “surplus power” was a factor that helped draw the Texas company to North Dakota.
- Bitzero Blockchain, which describes itself as a developer of “100% sustainable zero carbon displacement” data centers, said in June that it is partnering with the Mandan, Hidatsa and Arikara Nation to purchase hydropower for several facilities under development in North Dakota.
“Bitzero’s decision to locate its North American headquarters in North Dakota is another example of how our state is emerging as the location of choice for clean energy data centers supported by reliable, affordable electricity produced with environmental stewardship,” Gov. Doug Burgum said in a message,
North Dakota is among the nation’s largest producers of wind power, with about 4,300 megawatts of installed capacity by the start of 2022. Wind power accounts for around a third of the production the region’s power grid – nearly four times the national average according to the US EPA.
However, North Dakota and the upper Midwest are also far more dependent on coal-fired power plants than the rest of the country. Barely two-fifths of the region’s electricity still comes from coal, nearly twice as much as the US grid overall. As a result, despite its wind advantage, the region’s grid still emits more carbon dioxide per megawatt-hour than the national average.
The North Dakota Department of Commerce did not respond to a request for comment last week.
Mike Jacobs, a senior energy analyst at the Union of Concerned Scientists, noted that being located near a wind farm doesn’t matter unless a cryptocurrency facility has a contract to buy its power. Without seeing the contract a data center has with its power supplier, it’s hard to know how much energy comes from wind or other clean sources, he said.
Applied Blockchain will purchase power from utilities in North Dakota and their mix will determine the clean energy mix in crypto mining. Although the Ellendale data center will operate near large wind farms, these are fully subscribed by companies such as Google and Xcel Energy. Instead, it will buy power from Montana-Dakota Utilities Co., which generates a third of its electricity from wind power.
Bitzero is the only cryptocurrency company whose announcement has hinted that a contract to purchase clean energy power is in the works, and even that arrangement is unlikely to result in new capacity, as large hydropower resources have not been added to the grid for decades.
Contracting new clean energy capacity can take years due to grid congestion and interconnection delays. Much of North Dakota’s existing unused capacity is from coal-fired power plants, which have struggled to compete with gas and renewables and could see more use with rising demand for electricity.
“What’s going to happen in North Dakota with crypto is that coal generation is almost inevitably going to be used,” said Scott Skokos, executive director of the Dakota Resource Council, a state environmental group.
That’s been the experience in Texas, which has seen a bitcoin boom since China banned cryptocurrency mining this year for waste of resourcesDespite talk of the potential to power the data centers with clean energy, experts say most crypto facilities in Texas run on standard mains powerof which more than 60% comes from coal and natural gas.
Cryptocurrency boosters have touted the facilities as potential grid resources that could help grid operators manage variable renewable generation. Data centers are typically “interruptible” loads, meaning they can be quickly shut down when the grid is under load. “We’re pretty good at screwing up and down, but that’s not something you can do with steel mills or food processing plants,” said Cummins of Applied Blockchain.
Rao Konidena, a consultant and former political adviser to grid operator MISO, said he believes data centers — cryptocurrency or otherwise — are likely to play a role in balancing the grid because of their flexibility, especially if equipped with battery storage.
However, demand response is not unique to data centers, and critics say the cryptocurrency industry and its boosters are exaggerating its potential benefit to the clean energy transition. “They don’t help the grid,” said GridLab’s O’Connell. “It’s just a new charge.”
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