Cryptocurrency data centers eye North Dakota for its cold winters | Bismarck

Interest has picked up over the past year in locating data centers within North Dakota. Such facilities consist of computer servers that can be used for a variety of purposes, including to mine digital money in the case of some of the companies considering the state.

Data centers generate a lot of heat. They tend to require a significant amount of power and cooling equipment to function well.

“Every time I talk to a utility and mention data centers, they say, ‘Oh yeah, we’ve got all kinds of people talking to us wanting to come,’” said John Weeda, director of the North Dakota Transmission Authority.

Data centers are needed for cloud storage. Banks use them for financial transactions. The facilities are increasingly in demand to facilitate cryptocurrency transactions, which are recorded in ledgers known as blockchains. Computers lend processing power to validate those transactions, and they are rewarded with more cryptocurrency such as Bitcoin.

That so-called “mining” process is energy-intensive, as electricity powers the servers and the fans used to cool down the hardware.

“One reason data centers like the northern climate is that their energy cost for cooling equipment is a lot less in North Dakota than in Arizona,” Weeda said. “The atmospheric temperature does a lot for you, especially right now (in winter).”

The interest in locating data centers within North Dakota poses challenges for utilities and the communities where the facilities might set up shop.

The topic came up at last week’s Bismarck City Commission meeting. City officials have fielded inquiries from companies looking for spots for data centers in recent months, but Bismarck’s ordinances do not allow for the standalone facilities.

“We want to give some thought to, if we do allow these types of facilities to occur in our community, where they might most appropriately be located,” Community Development Director Ben Ehreth told the commission.

Data centers already exist in the city, but they are attached to businesses such as hospitals and telecom companies. Their computers are not necessarily used for cryptocurrency mining — often they are for essential information technology functions.

The fans associated with a large standalone data center could generate a lot of noise, and city officials say the facilities inquiring about coming to Bismarck may or may not place employees on-site. Officials have expressed concerns about the potential for data centers to catch fire, as has happened in other North Dakota communities such as at a Grand Forks computer server farm in 2019.

The Bismarck commission directed city workers to continue researching the topic and develop an ordinance to bring back for further consideration.

Representatives from Capital Electric Cooperative have been in touch with city officials to discuss data centers.

“In the last year or so, we’ve been contacted by close to 10 different groups,” Energy Services Manager Josh Schaffner said.

Companies considering putting in data centers have been inquiring about electricity rates and locations, he said. Some proposals involve dropping off trailers that would contain the servers.

“They want to have easy access for trucks to get in and out,” Schaffner said.

There are a number of logistics to sort through, both for utilities and the companies looking to run data centers. The facilities’ high electric consumption could mean power-related equipment needs to be upgraded. Data center developers also have not been keen on the idea of curtailing the sites’ operations during peak power usage times, or the high costs they could incur for running during those periods, Schaffner said.

So far, the talks involving Capital Electric have been preliminary, he said. At least one other electric distribution co-op is already part of such an effort — Nodak Electric Cooperative is involved in a standalone data center project in Grand Forks.

Another large data center meant for cryptocurrency mining is in development in Jamestown. Smaller operations already exist in the oil fields of western North Dakota, where natural gas fuels generators that power computers.

Weeda said he has heard of data center projects proposed in many parts of the state with electricity needs ranging from 5 to 500 megawatts.

North Dakota’s largest coal-fired power plant, Coal Creek Station, has a 1,100-megawatt capacity. The facility’s incoming owner, an affiliate of Bismarck-based Rainbow Energy Marketing Corp., has plans for a data center in its vicinity, according to documents filed with regulators in Minnesota. A spokesperson for the company said Rainbow is not ready to share further details.

Weeda works under the regulators that make up the North Dakota Industrial Commission, and he often communicates with utilities and energy project developers. He said companies interested in putting data centers within the state view its power plants as a benefit, given their electricity needs.

“They want steady supply,” he said.

He has suggested that data centers consider locating near wind farms, but that idea has not been popular so far given that wind turbines generate power only about half the time, when it’s breezy, he said.

Data centers, particularly those used to facilitate cryptocurrency mining, have come under fire from environmentalists because of their energy consumption. China recently imposed restrictions on the facilities in part because of their carbon footprint.

In North Dakota, it’s not just data centers potentially consuming large amounts of energy in the future. Weeda expects a number of industrial facilities to open in the state in the years ahead, as indicated by the flurry of projects that have sought state funding assistance through the new Clean Sustainable Energy Authority.

“Do we have room on the grid for everybody? I think we need to be asking ourselves that question,” he said.