McFeely: Who benefits from crypto mining in ND? The New York Times has the answer – InForum

FARGO — The question has always been: Why is North Dakota so intent on attracting cryptocurrency mining?

That has clearly been a focus for Gov. Doug Burgum and his cabinet. Burgum has touted massive projects in Williston, Jamestown and Grand Forks.

His capricious friend, “Shark Tank” fraud Kevin O’Leary, announced plans to build a data center on an abandoned Cold War radar base near Nekoma, while its owner, Bitzero Blockchain Inc., said it will move its headquarters to North Dakota .

All this is about, according to the governor and his subjects, diversifying the state’s commodity-based economy.

But the question has always been nagging: Who benefits from it?

It can’t be the local communities, because crypto mining centers employ few people when they first start up. It’s not like a factory moving to North Dakota that will employ 500 people. There are perhaps a few dozen full-time jobs.

The New York Times may have provided the answer with a recent report headlined “The Real-World Costs of the Digital Race for Bitcoin.”

The thorough investigation comes to the conclusion many have suspected: There is little benefit except that the cryptocurrency companies and power companies supply the gigantic amounts of energy needed to mine bitcoin.

The cost comes to the environment and possibly electric company customers who may see higher bills.

The cash offer, if you will, came from state Commerce Commissioner Josh Teigen.

From the Times:

Bitcoin operations’ effect on the state’s economy is simple, said Josh Teigen, the Commerce Commissioner: “They prop up our fossil fuel industry, and that’s exactly what we want.”

North Dakota has an abundance of lignite, a type of coal primarily used to generate electricity. Mr. Teigen said the state hopes to eventually capture the carbon from fossil-fuel power plants and store it underground, reducing emissions while keeping the coal industry alive.

The state is betting again on the dying coal industry. And bet on carbon capture technology that has not yet been proven reliable.

Also from the Times:

… Bitcoin mines provide significantly fewer jobs, often employing only a few dozen people once construction is complete, and stimulate less local economic development.

Their economic benefits flow almost exclusively to their owners and operators. In 2021, the year Bitcoin’s price peaked, 20 executives at five publicly traded Bitcoin companies received a combined nearly $16 million in salary and over $630 million in stock options, filings show.

Electricity customers in Texas, another crypto-mining hotspot, have seen their bills jump about 5% — or $1.8 billion — thanks to the high demand caused by crypto-mining, according to the Times.

The data centers are also terrible for the climate, generating vast amounts of greenhouse gases due to the extraordinary power they use. “The extra electricity use across the country also causes as much carbon pollution as adding 3.5 million gas-powered cars to America’s roads,” the Times reported.

The play in North Dakota is for electric companies and the coal mines that feed them.

Oh, and the foreign investors.

Energy customers in North Dakota and the climate? Maybe not so much.

Mike McFeely is a columnist for The Forum of Fargo-Moorhead. He began working for The Forum in the 1980s while studying journalism at Minnesota State University Moorhead. He has been with The Forum full-time since 1990, minus a six-year break when he hosted a local radio talk show.