North Dakota’s bitterly cold winters set the ideal backdrop for a new industry that’s eyeing the state: cryptocurrency.
Interest in data center location in North Dakota has increased over the past year. Such facilities consist of computer servers that can be used for a variety of purposes, including mining digital money in the case of some of the companies the state is considering.
Data centers generate a lot of heat. They typically require a significant amount of power and cooling equipment to function well.
“Every time I talk to a utility and mention data centers, they’re like, ‘Oh yeah, we have all sorts of people who want to talk to us and want to come,'” said John Weeda, director of the North Dakota Transmission Authority.
Data centers are required 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 these transactions and they are rewarded with more cryptocurrency like bitcoin.
This so-called “mining” process is energy-intensive, as electricity drives the servers and the fans are used to cool the hardware.
“One reason data centers are like the northern climate is that their cooling equipment energy costs are much lower in North Dakota than in Arizona,” Weeda said. “Atmospheric temperature does a lot for you, especially now (in winter).”
Interest in data center location in North Dakota poses challenges for utility companies and the communities where the facilities may be located.
The issue came up at last week’s Bismarck City Commission meeting. City officials have received inquiries from companies looking for data center space in recent months, but Bismarck’s ordinances don’t allow standalone facilities.
“We want to think about allowing these types of facilities in our community, where they could best be located,” community development director Ben Ehrlich told the commission.
Data centers already exist in the city, but they’re attached to businesses like hospitals and telecom companies. Your computers are not necessarily used for cryptocurrency mining – often they are used for basic information technology functions.
The fans, which are connected to a large standalone data center, could make a lot of noise, and city officials say the facilities inquiring about visiting Bismarck may or may not have on-site staff. Officials have raised concerns about the possibility of data centers catching fire, as has happened in other North Dakota communities, such as at a computer server farm in Grand Forks in 2019.
The Bismarck Commission directed city workers to further research the issue and draft an ordinance to be brought back for further consideration.
Representatives from the Capital Electric Cooperative have reached out to city officials to discuss data centers.
“In the last year or so, we’ve been contacted by almost 10 different groups,” said Energy Services Manager Josh Schaffner.
Companies considering building data centers have been asking about electricity prices and locations, he said. Some suggestions include delivering trailers that would contain the servers.
“They want easy access for trucks to get in and out,” Schaffner said.
There are a number of logistical tasks to be completed for both utility companies and companies that want to operate data centers. The high power consumption of the facilities could mean that energy-related devices have to be retrofitted. Data center designers also weren’t thrilled with the idea of restricting sites from operating during peak electricity usage periods, or the high costs they could incur for operating during those times, Schaffner said.
So far, talks with Capital Electric have been preliminary, he said. At least one other power distribution cooperative is already involved in such efforts — Nodak Electric Cooperative is involved in a standalone data center project in Grand Forks.
Another large data center for cryptocurrency mining is under development in Jamestown. Smaller operations already exist in the oil fields of western North Dakota, where natural gas powers generators that power computers.
Weeda said he’s heard of data center projects planned in many parts of the state with power needs ranging from 5 to 500 megawatts.
North Dakota’s largest coal-fired power plant, Coal Creek Station, has a capacity of 1,100 megawatts. The facility’s new owner, a subsidiary of Bismarck-based Rainbow Energy Marketing Corp., has plans for a data center near it, according to documents filed with Minnesota regulators. A company spokesman said Rainbow was unwilling to share further details.
Weeda works under the regulatory agencies that make up the North Dakota Industrial Commission, and he often communicates with utility companies and energy project developers. He said companies interested in setting up data centers within the state see its power plants as an advantage given their electricity needs.
“They want a steady supply,” he said.
He has suggested that data centers should be located near wind farms, but the idea hasn’t been popular because wind turbines only generate electricity about half the time when it’s windy, he said.
Data centers, particularly those used to mine cryptocurrencies, have come under fire from environmentalists for their energy consumption. China recently imposed restrictions on the plants, partly because of their carbon footprint.
In North Dakota, it’s not just data centers that may be consuming large amounts of energy in the future. Weeda expects a slew of industrial plants to open in the state in the coming years, according to the spate of projects that have sought government support through the new Clean Sustainable Energy Authority.
“Do we have room for everyone in the grid? I think we have to ask ourselves that question,” he said.