Allowing crypto operations in Brainerd to move forward – Brainerd Dispatch

BRAINERD — Brainerd city officials issued two permits Monday, Oct. 3, that will advance proposed cryptocurrency mining operations in the industrial park.

Despite a split vote by the Planning Commission, city council members approved two temporary use permits, allowing VCV Digital Infrastructure Minnesota LLC to build storage containers at 1911 and 1918 Thiesse Drive, with outdoor storage designated as the primary use for the properties.

VCV Digital will operate the crypto mining facilities after working with B&D Power Solutions – the company that originally approached the city – to acquire the land for the operations. The permits are conditional on the final sale of the properties to VCV Digital, and they will become void if crypto mining is discontinued on the sites.

Cryptocurrency is a form of digital money that is decentralized and can be used to buy goods over the internet and exchange money without a bank being involved. While there are thousands of cryptocurrencies and counting, Bitcoin has emerged as the most popular. Cryptocurrency mining is the energy-intensive process of extracting digital money by solving complex puzzles via supercomputers.

While council members unanimously approved the permits Monday, the Planning Commission’s vote on the items was split 3-3 during its September meeting, as some members voiced their opposition to cryptocurrency mining in general.

“I think it’s a horrible project for our city, and I think it compromises our future energy independence and sustainability,” Planning Commission Chairman Mike Duval said Sept. 21. “When I look at 16 employees for a total of 50 megawatts of power, that’s a huge amount of energy.”

Brainerd Public Utilities approved a purchasing power agreement with VCV Digital in March, awarding the company 50 megawatts of power per month once operations are underway. The approved purchase agreement states that the power is interruptible, meaning that if the power had to be shut down for any reason, the power to the cryptocurrency facility would be the first to go ahead of the rest of the city.

Brainerd’s additional power capacity made the city an attractive location for cryptocurrency mining. When a new BPU substation was built in 2008, the capacity was based on future growth projections for the city, leading to three transformers each capable of handling 47 megawatts of power. The maximum energy use for BPU’s coverage area during the year is 40 megawatts, about 100 megawatts less than total capacity.

In March, BPU commissioners approved an agreement with American Electric Power — BPU’s energy supplier — to purchase necessary power when needed. Once the cryptocurrency operations are up and running, American Electric Power will pass the cost of the energy to BPU, and BPU will in turn bill the company.

BPU is working on a similar agreement with Clough Properties and its subsidiary Just for Krypto for 20 megawatts of electricity.

The idea of ​​cryptocurrency operations in Brainerd was hotly contested late last year, when both Texas-based B&D Power Solutions and local Clough Properties expressed interest in buying the same plots of land in Brainerd’s industrial park for their cryptocurrency facilities. There was also concern that the city had the capacity to meet the power requests from both companies.

During a meeting with the economic development authority last December, commissioners addressed misinformation that had spread on social media about the issue, including accusations that the city chose to work with an out-of-state company instead of a local one. B&D Power Solutions previously had operations in China before cryptocurrency mining was banned in the country.

The City Council’s actions up to that point did not accept or reject proposals from either company, but transferred land in the industrial park to the EDA, giving the EDA the authority to enter into negotiations with both companies. EDA members agreed to enter those negotiations in December, but Clough Properties has since opted to purchase an existing building in the industrial park for its cryptocurrency business.

EDA agreed in March to sell two parcels in the industrial park to VCV Digital for $277,815, with the sale conditional on the company submitting a construction plan and securing financing. EDA found that these conditions had been met in September and conveyed the lottery to VCV Digital.

Contributed

A 3-3 vote saw planning commissioners divided on approving VCV Digital’s temporary use permits in September. Chairman Duval, along with Commissioners Don Gorham and Chuck Marohn, opposed the measures, while Commissioners Tad Erickson, Kevin Yeager and Theresa Woodward supported them. Commissioner Matt Kallroos was absent from the meeting.

Gorham asked several questions about the city’s power supply, how much of the energy is renewable and the ethics of using so much power to promote wealth by mining cryptocurrency.

Jerry Tang, who attended the meeting virtually on behalf of VCV Digital, compared cryptomining to other activities people use electricity for, such as playing video games or streaming videos on YouTube, saying that the productivity of such is subjective to the user.

Duval argued against the business using the city’s comprehensive plan, which says the city aims to ensure adequate water and power supplies to meet long-term needs of the city and steer urban development toward energy conservation. He also said he did not believe the proposed 16 full-time jobs that would result from the facility were not enough to justify the project.

“I’m just blown away by how much energy this project would consume,” Duval said. “It is in direct opposition to the goals of our comprehensive plan.”

Tang reminded the commission that the operations would not take energy from the city, but would only use the city’s infrastructure to use the power, which would be purchased through American Electric Power. He added that the company will pay BPU well over $1 million a year for the energy it uses, which in turn will fund BPU’s solar project, bringing more renewable energy to the city.

BPU Superintendent Scott Magnuson said during a phone interview Thursday, Oct. 6, that VCV Digital purchased renewable solar credits for five years. The city will use these credits to pay off the costs of the solar field, which in turn makes the purchasing power price lower for BPU.

Marohn proposed that a clawback clause be included in the permit, requiring VCV Digital to reimburse the city for work that had to be done on the site for other business ventures if the crypto mining operation failed within a certain time.

Erickson, who serves on both the Planning Commission and City Council, advocated for the permits, telling commissioners it was not their place to question the business plan of someone proposing to do business in the city. It is the company, he said, that takes the risk on itself.

Contributed

“How long have we been sitting with empty plots in this industrial park? And now we have an opportunity to at least use it to some extent, Erickson said.

Yeager agreed, noting that BPU officials already said they had no concerns about the amount of power requested by both companies proposing cryptocurrency operations. Yeager said the city’s energy capacity is a unique asset, and he fully supports a business coming in to use that asset.

“We have an applicant in front of us who wants to do something with an empty lot that sits there and does nothing. We have nothing in front of us right now. So I just think if you have somebody that wants to go, you let them go,” Yeager said.

When it came time to vote on the initial permit for 1911 Thiesse Drive, Duval said there was too much confusion about how everything would work in terms of the power supply, and Gorham said he had too many unanswered questions.

Council members unanimously approved both permits during their meeting Monday, as did the staff recommendation.

Councilman Mike O’Day said that while he was against this project at first, he would vote for the permits because of all the work involved with it, including the power agreement and the land sale.

Erickson repeated his comments about the city’s role in questioning business plans and the information about BPU officials already addressing the availability of power.

During the council comment section at the end of Monday’s meeting, Mayor Dave Badeaux spoke about city officials’ duty to be stewards of the city and hold themselves to the highest possible standards, saying there were some recent events that have been “a little squirrely.” ” and got the town off track.

One of the points he mentioned was the last meeting of the planning commission, saying that those who sit on all city commissions should make it a point to ask relevant questions related to issues in advance and come prepared to meetings. Regarding cryptomining, Badeaux said some of the questions asked at the Planning Commission meeting were answered at previous meetings of other bodies, and if the commissioners still had questions, they could have arranged for BPU officials to be present to answer them. .

“Even though we’re commissioners, if we have questions, attend those meetings and ask those questions, or send an email that addresses those questions so we can actually address those things instead of … potentially attacking somebody’s business plan ,” Badeaux said. “We just can’t have that kind of thing.”

He said his speech was not meant as a direct attack on anyone, but as a reminder that people are interested in what the city is doing and are prepared to hold city officials accountable if things aren’t done right.

Brainerd’s committees and commissions are made up of unpaid volunteer citizens and property owners.

There is not yet a set timeline for when the cryptocurrency mining facilities will be operational.

THERESA BOURKE can be reached at [email protected] or 218-855-5860. Follow her on Twitter at www.twitter.com/DispatchTheresa.