The frigid North Dakota winters make for the perfect location for a new industry eyeing the country: cryptocurrency.
Over the past year, interest has increased in locating data centers within North Dakota. These facilities consist of computer servers that can be used for a variety of purposes, including the extraction of digital money in the case of some state-minded companies.
Data centers generate a lot of heat. They tend to require a great deal of power and cooling equipment to function well.
“Every time I talk to a facility and mention data centers, they say, ‘Yeah, we have all kinds of people talking to us that want to come,'” said John Weda, director of the North Dakota Transportation Authority.
Data centers are needed for cloud storage. Banks use it for financial transactions. These facilities are in high demand to facilitate cryptocurrency transactions, which are recorded in ledgers known as blockchains. Computers are given processing power to validate these transactions, and they are rewarded with more cryptocurrencies like Bitcoin.
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The so-called “mining” process is energy-intensive, with electricity powering servers and fans used to cool devices.
“One of the reasons for data centers like the northern climate is that the energy cost of cooling equipment is much lower in North Dakota than in Arizona,” Weeda said. “Atmospheric temperature does a lot for you, especially right now (in winter).”
The interest in locating data centers within North Dakota poses challenges for facilities and the communities in which the facilities may set up shop.
The topic was brought up at a meeting of the Bismarck City Committee last week. City officials have sent inquiries from companies looking for locations for data centers in recent months, but Bismarck’s ordinances do not allow standalone facilities.
“We want to think about some things, if we allow these kinds of facilities to happen in our community, where it might be more appropriate to have them,” Community Development Director Ben Erith told the committee.
Data centers are already in the city, but they are connected to businesses such as hospitals and telecom companies. Their computers aren’t necessarily used for cryptocurrency mining – they’re mostly meant for basic IT jobs.
Fans attached to a large independent data center can generate a lot of noise, and city officials say facilities inquiring about coming to Bismarck may or may not have staff on site. Officials have expressed concerns about the potential for data centers to catch fire, as happened in other North Dakota communities such as the Grand Forks computer server farm in 2019.
The Bismarck Committee directed city workers to continue researching the topic and to develop an ordinance to return it for further study.
Capital Electric Cooperative representatives have been in touch with city officials to discuss data centers.
“In the past year or so, we’ve been approached by nearly 10 different groups,” said Director of Energy Services Josh Schaffner.
He said that companies that are considering setting up data centers inquire about electricity prices and locations. Some of the proposals include dropping trailers that would contain the servers.
“They want trucks to have easy access to get in and out,” Schaffner said.
There are a number of logistics to sort through, for both utilities and companies looking to run data centers. A facility’s high electrical consumption may mean that energy-related equipment needs to be upgraded. Schaffner said data center developers were also not keen on the idea of reducing site operations during times of peak energy use, or the higher costs they could incur to operate during those periods.
He said talks involving Capital Electric have so far been preliminary. At least one other electric distribution cooperative is already part of that effort—the Nodak Electric Cooperative is participating in an independent data center project in Grand Forks.
Another large data center dedicated to cryptocurrency mining is under development in Jamestown. There are already smaller operations in the oil fields of western North Dakota, where natural gas powers generators that power computers.
Weda said he has heard of proposed data center projects in many parts of the state with electricity needs ranging from 5 to 500 megawatts.
The largest coal-fired power plant in North Dakota, Cole Creek, has a capacity of 1,100 megawatts. The facility’s next owner, a subsidiary of Bismarck-based Rainbow Energy Marketing Corp., has plans for a data center in its vicinity, according to documents submitted to regulators in Minnesota. A company spokesperson said Rainbow is not ready to share more details.
Weeda works under the regulators that make up the North Dakota Industrial Commission, and often communicates with developers of power and utility projects. He said that companies interested in setting up data centers within the country consider power plants to be useful due to their electricity needs.
“They want a steady supply,” he said.
He’s suggested that data centers consider locating near wind farms, but that idea wasn’t popular until now because wind turbines only generate power about half the time, when it’s breezy, he said.
Data centers, especially those used to facilitate cryptocurrency mining, have come under fire from environmentalists for their energy consumption. China recently imposed restrictions on facilities in part because of its carbon footprint.
In North Dakota, data centers are not only likely to consume large amounts of energy in the future. Weeda expects to open a number of industrial facilities in the state in the coming years, as evidenced by the series of projects that have sought state funding assistance through the new Sustainable Clean Energy Authority.
“Do we have space on the net for everyone? I think we need to ask ourselves that question,” he said.
You can reach Amy R. Sisk at 701-250-8252 or firstname.lastname@example.org.