ND ‘cleanest crypto’ claim ignores state’s fossil fuel-powered grid

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 home to the “cleanest 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.

“Claiming that 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 policy consultancy. group based in Berkeley, California.

At a bitcoin conference in Miami last spring, North Dakota officials promoted the state’s energy mix as a top selling point for building cryptocurrency facilities in the state, along with low taxes, minimal regulation and a relatively cooler climate, which could reduce the power load required to prevent that hardware overheats in parts of the year.

Cryptocurrency “miners” are specialized data centers set up to run complex algorithms that create new digital tokens. The industry has quickly grown to become one of the most energy-intensive in the world – consuming an estimated 150 terawatt-hours of electricity annually, more than the entire country of Argentina, according to a University of Cambridge study.

At least three cryptocurrency companies have cited North Dakota’s energy resources in recent project announcements:

• In January, Kevin Washington, CEO of Atlas Power Data Center, said in a press release that building its largest-ever project near Williston will 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 an announcement 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% renewable zero carbon offset” data centers, said in June that it is working 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 yet 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 an announcement .

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 about a third of the generation on the region’s electric 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. Just under two-fifths of the region’s electricity still comes from coal, almost twice as much as the US grid as a whole. As a result, despite the wind advantage, the region’s grid still spews out 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 the power. Without seeing the contract a data center has with its electricity supplier, it is difficult to know how much energy comes from wind or other clean sources, he said.

Applied Blockchain will purchase electricity from North Dakota utilities and their mix will determine the clean energy mix for 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 buy clean energy power is in the works, and even that arrangement is unlikely to result in new capacity, as large hydro resources have not been brought online 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 going to be used, almost inevitably,” 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 wasting resources. Despite talk of the potential to power the data centers with clean energy, experts say most crypto facilities in Texas run on standard grid power, more than 60% of which comes from coal and natural gas.

Cryptocurrency boosters have presented 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 network is strained. “We’re pretty good at screwing up and down, but it’s not something you can do with steel mills or food processing plants,” said Cummins of Applied Blockchain.

Rao Konidena, a consultant and former policy adviser for 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 the potential benefit of the transition to clean energy. “They don’t help the grid,” said O’Connell, of GridLab. “It’s just another strain.”