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.
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.