Compute North’s cryptofarm on hold in Greenville, citing uncertainty of energy costs

Cryptofarms “mine” cryptocurrency using hundreds of high-powered computers. These operations consume enormous amounts of energy, both because of the need for computing power and fans to cool the machines. (Photo: Adobe Stock)

A large cryptofarm planned for Greenville, in Pitt County, is on hold after Compute North decided to “pause” the project last month.

Compute North spokesperson Kristyan Mjolsnes told Policy Watch via email that “based on legislative and regulatory actions that may impact the cost of energy in North Carolina, Compute North made the decision in early April to pause development plans in Greenville.”

The Greenville Utilities Commission announced Compute North’s decision yesterday.

Mjolsnes was referring to a dispute between Duke Energy and the NC Eastern Municipal Power Agency, which represents dozens of electric cooperatives in the state, including Greenville. These cooperatives buy power from Duke Energy.

Last year Duke had argued before the Federal Energy Regulatory Commission (FERC) that battery storage did not count toward “demand-side management” or “demand-side response.” Demand-side means that the users are encouraged to adjust their energy usage, particularly during peak periods, to decrease power plants’ output. This helps reduce costs and alleviate the need for more power plants.

Battery storage would allow the electric co-ops to charge those devices during low-demand periods and then draw from them during the high- demand times, according to FERC documents. The co-ops argued this practice would qualify as “demand-side” management.

But using battery storage could have also zeroed-out the co-ops’ “capacity charge” — rates levied during high demand — and cut into Duke Energy revenues.

The utility then turned to FERC to rule on whether battery storage qualified as demand-side management; FERC ruled in favor of NC Eastern Municipal Power. The case went to the US Court of Appeals in the Fourth District, which found Duke’s arguments without merit.

Now Duke and NC Eastern Municipal Power are negotiating over how to calculate demand charges.

However, these charges are calculated would affect Compute North’s cryptofarm. As Policy Watch reported in January, cryptofarms consume enormous amounts of energy, in some cases as much as that of small countries. These cryptofarms, often misleadingly described as “data-processing centers,” tend to locate where energy sources are cheap and oversight is lax. If the outcome of the Duke and NC Eastern Municipal Power negotiations results in higher energy costs, Greenville would no longer be an attractive location.

Cryptomining uses a network of high-powered computers to verify cryptocurrency — an alternative form of money, including Bitcoin or Ethereum. The allure of cryptocurrency is that it sidesteps banks and financial institutions. Compute North’s proposed modular center — meaning it is housed in shipping containers —  does not itself mine cryptocurrency. It hosts the computers that do the mining. To use a gold mining analogy, Compute North would own the land where individual miners would pay a fee for the rights to pan for the precious metal.

This is the second setback for the project. Compute North, based in Minnesota, withdrew a special use permit request last November shortly before a scheduled vote by Pitt County Commissioners — a vote that was unlikely to go the company’s way.

The company then planned to move their cryptofarm within Greenville’s jurisdictional area. Earlier this year the Greenville City Council approved a rezoning request that would have allowed Compute North, or any crypto processing center, to locate in certain industrial areas. The zoning change was requested by the Greenville Eastern North Carolina Alliance, an economic development group.

Cryptomining uses a network of high-powered computers to verify cryptocurrency — an alternative form of money, including Bitcoin or Ethereum. The allure of cryptocurrency is that it sidesteps banks and financial institutions. Compute North’s proposed modular center — meaning it is housed in shipping containers —  does not itself mine cryptocurrency. It hosts the computers that do the mining. To use a gold mining analogy, Compute North would own the land where individual miners would pay a fee for the rights to pan for the precious metal.

After peaking in value last year, nearly all forms of cryptocurrency have crashed in recent months, losing $2 trillion in value and in some cases, costing investors most of their life savings, at least on paper.

 

“No one tells me what to do”: Meeting notes reveal favored contractors, animosity toward others in Hurricane Matthew recovery

The Zerbys’ home in Craven County, damaged during Hurricane Matthew. It was scheduled to be finished April 29. This photo was taken on April 28. (Photo: Lisa Sorg)

In response to a Policy Watch investigation published last week, the North Carolina Office of Recovery and Resiliency (NCORR) denied that Rescue Construction Solutions (Rescue) received favorable treatment over other general contractors in bidding and scoring related to Hurricane Matthew disaster recovery work.

Hundreds of households — equivalent to thousands of people — remain displaced from Hurricane Matthew, which occurred in October 2016. These North Carolinians are still living in motels, travel trailers, with relatives, or even in their original damaged homes.

However, notes taken by someone who attended weekly meetings about NCORR’s RebuildNC program show that Ivan Duncan, NCORR chief program delivery officer, did give Rescue leeway not afforded to other contractors. The person provided the notes to Policy Watch on the condition they would not be named, because they were afraid of retaliation by the state. Excerpts appear below; Policy Watch deleted some entries because they were very technical and weren’t relevant to the issue.

Among the revelations:

  • Duncan reportedly told inspectors in May 2021, not to visit homes Rescue had built. This allowed Rescue to sidestep oversight.
  • Duncan also allegedly allowed Rescue to delay starting some of its construction projects, according to notes taken in May 2020. That’s important because contractors’ performance and eligibility to bid on future contracts is based in part on their completion rate.
  • Other examples of alleged preferential treatment include Duncan’s edict to pay Rescue to move a household for the second time; other general contractors were not given the same consideration, the notes say.
  • Last year, the notes indicate Duncan also looked favorably upon RHD, another contractor. However, the notes show that RHD hesitated to accept Duncan’s offers.

The meetings were not recorded because Duncan required attendees to turn off their phones and place them in a bucket. In a previous Policy Watch story, NCORR Director and Chief Operating Officer Laura Hogshead said that practice no longer occurs. The notes indicate that Duncan reportedly said he “works in gray areas,” and asked contractors not to put anything in writing or emails. Such correspondence would be public under state open records law.

Rescue has not responded to written questions about its performance. Instead, the company hired a crisis communications firm, which issued a statement last week saying the company had bid properly, but it did not address the questions.

Policy Watch shared these notes with NCORR. A spokesperson for the agency released the following statement Tuesday morning:

NCORR remains committed to helping hurricane survivors rebuild their homes and communities as evidenced by the more than 700 houses already repaired or replaced in eastern North Carolina. We take the Policy Watch allegations very seriously and will thoroughly investigate to determine their validity and whether corrective action is needed. Many of the allegations thus far have been based on unconfirmed or inaccurate documentation, misinterpretation of program policy, or hearsay from unknown sources. For example, it is misleading to say that only certain general contractors had projects inspected. In fact, all projects had recurring inspections by county inspectors, while the lead contractor in charge of construction oversight, AECOM, was also tracking every project. Whether or not every contractors’ projects had an unannounced visit by state officials, they were all were inspected multiple times by qualified experts. This is just one example of how NCORR has been misrepresented in recent coverage. We look forward to sharing factual information to demonstrate that NCORR is not only committed to helping storm survivors recover, but also to full compliance with the law.

Names of individual contractors have been redacted and replaced with company names. Policy Watch added the annotations and highlighting to explain the significance of those passages.

Abbreviations and definitions
GC: General contractor

CRCS, Persons, Rescue, Duckey, RHD, Excel: Company names of general contractors

AECOM: Construction management company that is the liaison between NCORR and the contractors

Sprayberry: Former Director of Emergency Management Mike Sprayberry

Trace: Trace Allard, NCORR director of program delivery

Open procurement: Competitive bidding process

Ryan: Ryan Flynn, former NCORR chief of staff

O&P: Overhead and profit

ECR: Estimated cost of repairs

MHUs: Mobile home units

Jonathan Doerr: NCORR attorney

NTP: Notice to Proceed; when an NTP is issued, the clock starts on construction, which is required to be finished within a certain amount of time, depending on the complexity of the project, usually 90-135 days. Contractors can request time extensions.

CO: Change orders, adjustments to the construction costs when unforeseen issues arise, such as mold, termites, asbestos

Red wolf illegally killed in Tyrrell County, federal officials offer $5,000 reward for info

Red wolves are federal protected. In the wild they are found in northeastern North Carolina, part of their historical range. (Photo: Leigh Gill/USFWS)

In a muddy farm field south of Newlands Road, the red wolf lay dead. Shot in the spine, the wolf had collapsed on the field in rural Tyrrell County. During a necropsy, the animal’s lungs were found to be full of mud.

The U.S. Fish and Wildlife Service is investigating the death of the wolf, found on April 15, offering a reward of $5,000 for information that leads to the successful prosecution in this case. Anyone with information on the death of the red wolf is urged to contact North Carolina Division of Refuge Law Enforcement Patrol Captain Frank Simms at 252-216-7504 or Special Agent Jason Keith at 919-856-4786 ext. 34.

Because there are so few of them — an estimated 15 to 17 based on radio collaring data, as of last October — red wolves are federally protected in five counties: Beaufort, Dare, Hyde, Tyrrell, and Washington.

The fate of the species has long played out in federal court, as the Red Wolf Coalition and Defenders of Wildlife sued USFWS for failing to protect them, as legally required. Last year the two groups prevailed, when a federal judge order USFWS to reinstate protections and begin reintroducing them into the wild. The groups were represented by the Southern Environmental Law Center.

The species had already begun to rebound when the dead wolf was found. USFWS staff announced a litter of six wild red wolf pups (four females and two males) were born in mid-April. It was the first wild-born litter of red wolves since 2018.

At one time, the red wolf program marked a significant achievement for USFWS.  The agency released the first breeding pairs of red wolves into the wilds of northeastern North Carolina in 1987. By 1992, the agency had declared the experiment a success. In 2012, there were an estimated 120 wild red wolves living North Carolina.

As USFWS changed its policies on managing and protecting the wolves, the population plummeted. Under a 2018 proposal during the Trump administration, USFWS proposed shrinking the wolves’ protected area in North Carolina by 90%, limiting it to certain public lands in Hyde and Dare counties. Had that proposal become final, people could have killed the wolves in previously protected areas, which extended throughout Tyrrell, Washington and Beaufort counties.

Under the Biden administration, USFWS withdrew the proposal. The agency agreed to reintroduce the wolves in the wild and to take other steps to increase the chances the species could survive.

People can intentionally kill the wolves only to protect themselves, pets and livestock if they are in immediate danger. (If someone accidentally kills a red wolf, they must report it by calling the U.S. Fish and Wildlife Service toll-free at 1-855-4-WOLVES, 1-855-496-5837.)

Gov. Cooper’s budget on environmental issues: what it contains and why it matters

Gov. Cooper’s recommended budget, apportioned by topic area (Source: Governor’s Office)

Gov. Roy Cooper unveiled his $29.3 billion budget yesterday, 3% of which is devoted to natural and economic resources. 

Here are some highlights of the environmental sections and why they’re important:

Department of Environmental Quality

  • $2.49 million to address emerging compounds with additional staff and testing

Why it matters: Are you tired of PFAS yet? Well, PFAS aren’t tired of you. These toxic compounds have seeped into every day life: drinking water, carpet, clothing, fast food containers, furniture, cookware. They’re in blood, in pee, in breast milk.

This money would pay for more specialized staff — chemists, hydrogeologists, engineers — to meet the increasing need for groundwater testing, as well as permitting. What it will not pay for: the legislature’s political will to allow DEQ to establish a legally enforceable drinking water standard.

  •  $160,000 for a “project liaison” to collaborate with the Department of Commerce and Economic Development Partnership related to permitting and site development; plus another $500,000 for support positions

Why it matters: Former DEQ Secretary Michael Regan often said that it’s possible to have both economic development and environmental protection. That’s a sunny talking point, but In Real Life government and economic development leaders chase tax dollars from polluting industries while giving short shrift to the people who have to live next to the contamination. Those people are usually non-white and/or low-income. And once the first polluter enters a community, then it’s open season. (The NC Environmental Justice and Equity Advisory Board discussed cumulative impacts of multiple polluters at a meeting earlier this week.)

At the risk of using corporate lingo, state agencies are stuck in “silos”: For example, Commerce recruits a company to locate in North Carolina, but until recently no one has considered the environmental — or environmental justice — implications of that department’s efforts.

If the legislature actually includes this line item in their budget (don’t hold your breath), watchdogs should track how it plays out. If the legislature nixes the governor’s recommendation, DEQ and Commerce could still communicate about their respective concerns. The phone call is free.

  • $15 million for low-income households to reduce energy costs and afford clean energy sources

Why it matters: The national average residential electricity rate was up 8% in January from a year earlier, according to The New York Times, which reported it is the biggest annual increase in more than a decade. Low-income households are particularly hard-hit, as are renters. While this budget recommendation would help homeowners, how it would trickle down to renters remains to be seen. According to the NC Housing Coalition, there are 27 counties where renters average more than 8% of their household budget on energy. Renters tend to earn lower wages than homeowners, and since they have to answer to a landlord, they can’t upgrade their homes to make them energy efficient or outfit them with heat pumps or solar panels.

Department of Agriculture

  • $2 million for a forest development program

Why it matters: The importance of forests and trees can’t be overstated. They provide critical wildlife habitat, store carbon, provide shade, and absorb and hold flood waters. The forest development program in the governor’s budget would restore 18,200 acres of forestland — about the size of Durham County — and plant up to 6 million trees. That sounds admirable until you realize North Carolina’s wood pellet plants consume more than that each year.

Map: Lisa Sorg, based on DEQ database of swine farms and NC Division of Emergency Management flood plain data

  • $18 million for the swine farm buyout program

Why it matters: The Coastal Plain, with its sandy soils, high water table and proliferation of swamps, are not well-suited for CAFOS — Concentrated Animal Feeding Operations — and their open-air waste lagoons and spray fields.

Dozens of these farms lie within the 100-year flood plain, making their lagoons vulnerable to overtopping or breaching during a hurricane or prolonged storms. This money would help fund the voluntary buyout program, up to 19 swine farms. The land is put in a conservation easement, but farmers can still plant row crops on that land or raise livestock on pasture.

As Policy Watch reported in 2019, the buyout program launched in 1999, after Hurricane Floyd, Dennis and Irene hammered the state. After four buyout rounds totaling nearly $19 million for 43 farms, the legislature stopped funding the program in 2007. More than 100 farmers who wanted to participate in the buyout program couldn’t.

But Hurricane Florence was a game-changer: Rising water flooded 46 lagoons and another 60 nearly overtopped. In 2018, the NC Department of Agriculture secured $5 million to restart the buyouts, split between federal and state funds.

Department of Natural and Cultural Resources

  • $10 million for peatlands and pocosin conservation and inventory

Why it matters: First, peatlands are cool, at least when they’re not on fire. In this part of the world, they are the result of decomposed Sphagnum moss, shrubs and sedges. In Scotland, smoldering peat is used to dry malt that is used to make whisky. (Laphroig will knock your socks off.)

However, burning peat releases carbon dioxide, a major driver of greenhouse gas. North Carolina has coastal peatlands; those of you around in 2008 might remember when, during a severe drought, lightning struck a peat bog, igniting it. The bog burned for weeks, and the smell — and pollution– traveled west all the way to the Triangle.

Restoring peatlands — re-wetting them — can reduce carbon emissions and wildfire risk, as well as promote flood resilience and water quality, all very important not just to coastal communities but the planet.

These funds will also help the Natural Heritage Program inventory Coastal Plain wetlands that have been previously excluded from other counts. Wetlands can control flooding, filter pollution and provide key habitats. Finding, acquiring and protecting wetlands, particularly in the flood-prone Coast Plain, can build resiliency against future hurricanes and severe storms — events that are very likely because of climate change.

(Creative Commons)

Other appropriations

  • $10 million to the Department of Transportation so the state can receive matching federal grants for the first portion of the S Line: commuter rail that would link Wake, Franklin, Vance and Warren counties. Another $10 million would go to a local government program that would to provide matching funds for bike and pedestrian projects.

Why it matters: Transportation is responsible for 60% of the state’s greenhouse gas emissions. However, electric cars won’t solely dig the planet out of the climate crisis. As long as we continue to put more cars on the road, including electric, that sparks road widening. And road widening requires asphalt, whose manufacture and trucking emits greenhouse gases. More highway lanes often require massive clear-cutting of trees, which are carbon stores. (Exhibits A and B: I-40 in Wake County, I-95 in Cumberland County.)

As for the S Line, it’s years away, but a north-south rail line could alleviate the daily logjam on U.S. 1 and Capital Boulevard. 

Another way to get cars off the road is to make cities and suburbs safe and pleasant for walkers and bicyclists. Protected bike lanes, greenways, sidewalks that connect neighborhoods: People would more likely walk or bike to a coffeeshop if they didn’t have to cheat death by crossing four lanes of traffic.

 

Here are the documents: The state’s failure, after five years, to help Hurricane Matthew survivors

Herman Jones’s house in Craven County, still unfinished after more than a year (Photo: Lisa Sorg)

I was driving around rural Wilson County searching for a specific house, whose owner — a survivor of Hurricane Matthew — I had matched to property records. “No trespassing” read one sign. “Private property” read another. But a man was fixing his truck in the driveway, so I stopped, got out of the car, and ensuring that I stayed on the public road, asked if I could speak with him.

Sam Cockrell couldn’t have been nicer. He spent more than hour showing me around his property, his damaged home where his father once lived, his belongings crammed into two PODS. I learned he’s a fan of the Washington Football Team, likes motorcycles, and loves to fish.

He’s been living in a Comfort Inn for going on a year. He’s tired of it. He wants to be back in the shade of his pine trees. He wants to move into his new home, a 1,000-square foot Carson floor plan with a both a front and back porch that will keep him cool and dry.

In Craven County Herman Jones was tinkering in his workshop where he restores old radios. “Would you like to talk about your experience with Hurricane Matthew and your home?” I asked.

“Boy, would I,” Jones replied. And for the next 60 minutes he told me of his myriad frustrations with the contractor, Rescue Construction Solutions, and their subcontractors. He gave me a tour of his home, with its sticky back door and uneven kitchen floor. The ruined pile of concrete that had work crews had left open in the rain. The air vents that had been installed upside down.

These are real people, not just figures on a spreadsheet, not just “applicants.” They have been traumatized by Hurricane Matthew — and in some cases, Florence. And they’re still living motels, with relatives, in damage houses, in travel trailers, for months, even years.

How could this happen? All these people, likely thousands considering the number of households still displaced, without a permanent home five and a half years after Hurricane Matthew.

I needed to answer the questions: Who’s accountable? How is the system broken? Who has the power to fix it? What’s at stake? Who’s winning? Who’s losing?

The NC Office of Recovery and Resiliency is in charge of the homeowner recovery program for Hurricane Matthew disaster relief. And through sources and documents, I learned about a contractor, Rescue Construction Solutions.

It’s not the only contractor in the program, but it has the lion’s share of projects.

A month after trips to courthouses, database and property records searches, dozens and dozens of phone calls and emails, plus logging 1,000 miles on my Prius, I finally could write the first story, published yesterday. Simply put, it’s about how NCORR’s lack of oversight, its management of the disaster relief program and the plodding pace of Rescue Construction Solutions in particular, is holding up progress.

At stake are the happiness and peace of people like Sam and Herman and Sheri and Bill and Denisa and Judy and James and Gloria and Patricia, and all those people — not just “applicants” — who just want to go home.

Here are the public records requests. I filed the first one on April 12, and told NCORR I could accept the documents on a rolling basis. That means they could send the records as soon as they got them, rather than wait for all the documents to come in.

I have received very few documents from NCORR not even from requests filed nearly a month ago. I filed another request on May 9 with the Division of Emergency Management and the Department of Commerce asking for documents related to background checks for contractors; these two agencies were in charge of the program in 2018 when contractors were prequalified.

On Tuesday, May 2, I interviewed NCORR Chief Operating Officer Laura Hogshead on Zoom. With her permission, the interview was recorded.

Policy Watch immediately shared the audio and video with NCORR. On Thursday, May 4, NCORR requested a followup interview, which occurred on Monday, May 9. Again, the interview was recorded.

Hogshead also corresponded with me several times by email over the weekend of May 7-8.

I emailed Sheila Brewington, president of Rescue Construction Solutions, twice. She didn’t reply, but a crisis communications firm representing Rescue called me, then issued a statement — again not answering the questions.

These are some of the documents I cobbled together to report the story:

  • Bid worksheets
  • A Wake County civil court case against Rescue that started in 2017, and should have been disclosed by the company when it applied to be prequalified, and again when it bid on projects
  • A federal court case involving work at Fort Bragg. In that litigation, Rescue sued the bonding company for the general contractor over a pay dispute. The general contractor had fired Rescue for allegedly botching a roofing job, and didn’t want to pay. The court did force the contractor to pay Rescue. However, on page 4 of the document, there is a reference to Rescue’s “unworkmanlike and untimely performance.”
  • The changes in scorecard measurements in the summer of 2021
  • Rescue’s pre-qualification application, dated June 2018
  • NCORR’s invitation to bid on the modular project dated July 16, 2021

Here are spreadsheets. All personal information has been removed.

Status of Rescue projects as of April 2022

All 1,486 complaints lodged against all contractors, not just Rescue. Rescue had 585 complaints, although that could be expected since the company had so many projects. Other companies with more than 100 complaints: Excel Contractors, 297; Persons Service 222 and Thompson Construction 172.