North Dakota officials are marketing the state as a destination for cryptocurrency companies that want to clean up the industry’s image as an unnecessary climate polluter, touting the state as a hotbed for “the cleanest crypto on the planet.”
But energy experts say that without specific corporate commitments to power data centers with new wind and solar farms, cryptocurrency mining in North Dakota is likely to work with a more energy mix. dirty than the national average.
“Pretending you’re cleaner because you’re in North Dakota isn’t really true, because the national electric mix is actually much cleaner than North Dakota’s electric mix,” Ric O’Connell said. , executive director of GridLab, a nonprofit energy policy consultancy. group based in Berkeley, California.
At a bitcoin conference last spring in Miami, officials from North Dakota promoted the state’s energy mix as a major selling point for building cryptocurrency facilities in the state, along with its low taxes, minimal regulation, and relatively cooler climate, which could reduce the electrical load needed to prevent hardware to overheat during certain parts of the year.
Cryptocurrency “mines” are specialized data centers set up to run complex algorithms that create new digital tokens. The industry has quickly become one of the most energy-intensive in the world — about 150 terawatt hours of electricity per year, more than the entire Argentine country, according to a study by the University of Cambridge.
At least three cryptocurrency companies have cited North Dakota energy resources in recent project announcements:
- In January, Atlas Power Data Center CEO Kevin Washington said in a press release that building its largest-ever project near Williston would allow it to “tap into a diverse mix of alternative energy sources.”
- Applied Blockchain touted its proximity to “significant wind capacity” last month in an ad for a new cryptocurrency mine in Ellendale. In an interview, CEO Wes Cummins said the state’s “excess power” was a factor that helped draw Texas society to North Dakota.
- Bitzero Blockchain, which describes itself as a “100% renewable zero carbon displacement” data center developer, said in June it was working with the Mandan, Hidatsa and Arikara nations to purchase hydropower for several ongoing facilities. development in North Dakota.
“Bitzero’s decision to locate its North American headquarters in North Dakota is another example of how our state is becoming the location of choice for clean energy data centers supported by reliable and affordable electricity produced in an environmentally responsible manner,” Governor Doug Burgum said. in an ad.
North Dakota is one of the nation’s largest producers of wind power, with about 4,300 megawatts of installed capacity as of early 2022. Wind power accounts for about one-third of generation on 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 much more dependent on coal-fired power plants than the rest of the country. Just under two-fifths of the region’s electricity still comes from coal, nearly twice as much as the US grid as a whole. 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, senior energy analyst at the Union of Concerned Scientists, noted that being located near a wind farm means nothing unless a cryptocurrency facility has a contract to buy its electricity. Without seeing the contract a data center has with its electricity supplier, it’s hard to know how much power is coming from wind or other clean sources, he said.
Applied Blockchain will buy electricity from North Dakota utilities and their mix will determine the clean energy mix of crypto mining. Although the Ellendale data center will operate near large wind farms, these are fully underwritten 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 suggested a clean power purchase agreement is in the works, and even that arrangement is unlikely to result in new capacity, as large hydro resources scale haven’t been added to the network for decades.
Contracting new clean energy capacity could take years due to grid congestion and interconnection delays. Much of North Dakota’s existing unused capacity comes from coal-fired power plants, which have struggled to compete with gas and renewables and could be used more with growing electricity demand.
“What’s going to happen in North Dakota with crypto is there will almost inevitably be coal production,” said Scott Skokos, executive director of the Dakota Resource Council, an environmental group in the USA. State.
This is the experience of Texas, which has seen a bitcoin boom since China banned cryptocurrency mining this year for waste resources. Despite talk of the potential to power data centers with clean energy, experts say most crypto facilities in Texas operate on the standard electrical networkmore than 60% of which comes from coal and natural gas.
Cryptocurrency boosters have touted facilities as potential network resources that can help network operators manage variable renewable generation. Data centers are typically “interruptible” loads, meaning they can be quickly shut down when the network is under strain. “We’re pretty good at showing up and refusing, but that’s not something you can do with steel mills or food processing plants,” said Applied Blockchain’s Cummins.
Rao Konidena, a consultant and former policy adviser for network operator MISO, said he thinks data centers — cryptocurrency or otherwise — will likely play a role in balancing the network because of their flexibility. , especially if they have 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 for the clean energy transition. “They’re not helping the grid,” said O’Connell of GridLab. “It’s just a new charge.”
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