Crypto Firms Are Buying Old Industrial Buildings for Mines

A WWII aircraft hangar in Texas has been converted into a bitcoin mine.
Photo: Courtesy of Compute North

Tucked away in the Appalachians near Marble, North Carolina, there is a 250,000 square foot factory building that made denim for Levi’s jeans. Beginning in the 1960s, Levi Strauss built many factories like this one in the southern United States, then closed almost all of them in the 1990s and early 2000s, when she moved her operations from manufacture abroad. After the North Carolina plant closed in 1999, the building, which spans 70 acres of land, sat empty for nearly two decades. Then the crypto miners came to town.

In 2017, Darin Feinstein had just founded Basic scientist, which is now one of the largest crypto mining companies in North America. At the time, the company was preparing to open its first facility, and Feinstein said he looked at over 500 sites trying to find everything on a very particular wish list. First, they were looking for an inexpensive source of power for the energy-intensive mining process, which meant a more rural location, as electricity tends to be cheaper further away from large cities. Ideally, they would also find the existing infrastructure that could be converted for mining purposes: a large empty building that could be filled with shoebox-sized computers, vents that could be used for thermodynamic cooling. and land for possible expansion.

In the abandoned Levi’s factory, Feinstein found all of the above. The sprawling building would fit many computers, but the main selling point was the proximity to a series of hydroelectric dams. They had helped power the factory but have been used much less since Levi’s left town. This type of ‘stranded power’, or a dormant energy facility with all the infrastructure already in place, is exactly what miners are looking for. So Core Scientific bought the old denim factory and filled it with computers, which have been running ever since, “mining” new bitcoin, litecoin, ethereum, and monero with every complex math problem they solve. .

Over the past year, cryptocurrencies like these have hit extremely high prices on crypto exchanges, resulting in a craze that has spawned a multitude of new currencies and spawned feverish speculation on NFTs. supported by blockchain. The high prices have also led to a boom in mining operations – and a hot new real estate market for old industrial space to be converted into mining facilities. “We have produced enough machines now” to meet the demand for new crypto mines, said Mike Colyer, CEO of Foundry, a mining company that provides equipment financing and consulting services to other miners. “But people have nowhere to plug them in.”

Many old factories are owned by private real estate developers, who bought them cheaply when manufacturing ceased – and are now reselling them at a profit. “We get phone calls from people even in New Hampshire and Vermont, from someone who might own a paper mill that has gone bankrupt, who will say, ‘I have a paper mill and nobody else does. wants to go up. here, can I install a bitcoin mining facility? ‘ Coyler said.

Many crypto miners are looking for their version of what Feinstein found in North Carolina: unused factories, cheap land, and industrial infrastructure that can be easily reused. The former manufacturing spaces are particularly attractive because industrial processes have something in common with mining. “You have to get a lot of air into the building and a lot of air out of the building, so usually you open up the side walls and ventilate it through the roof,” Colyer said. “This is why some places like the old Alcoa factories are some of the most popular, because they are very large buildings with a lot of electrical infrastructure installed, and the buildings were designed to dissipate heat, so they become places natural resources for mining. “

It’s not just denim factories and aluminum smelters. Across the country, mining operations have cropped up at a former steel mill in Calvert City, Kentucky; a former Gateway Computer industrial campus in South Dakota; a power plant in Hardin, Montana; an old aircraft hangar in Big Spring, Texas; and old fruit warehouses in eastern Washington state. The huge abandoned palimpsests of American industry are rekindled, almost overnight.

Computers are constantly working to solve complex equations in order to “mine” new crypto coins – using a lot of energy in the process.
Photo: Courtesy of Compute North

But not all residents and local officials jumped in to embrace the crypto-mining gold rush. There are concerns about electricity costs and energy consumption, and worry about other ills that could arise with the industry’s rapid expansion. These concerns are not entirely new: Eastern Washington has become the 2018 US-based mining epicenter, during the last bitcoin bubble, and after months of feverish speculation, a number of cities and counties imposed moratoria on new operations.

Now, some elected officials and residents of New York are also wary of crypto-mining. There are now at least two large mining operations in the Finger Lakes region, another epicenter of low-cost energy thanks to local hydroelectric facilities. A, Generation Greenidge, opened in 2020 in a former power plant that was originally coal-fired but converted to natural gas in 2017. Another breaks down at one of those sought-after Alcoa smelters in Massena, NY In early May, some lawmakers officials expressed concern that mines and their emissions could exacerbate the climate crisis. State MP Anna Kelles is the author a bill that would have imposed a three-year moratorium on new mining facilities in the state, as well as a state environmental impact assessment requirement for future mines. Residents are also concerned: In early June, WRFI community radio reported, 200 people gathered at the New York State Department of Environmental Conservation regional headquarters to protest Greenidge. “There’s nothing green about Greenidge,” one sign said.

Some of their concerns are very specific local environmental issues related to the Greenidge plant, such as the potential warming of Seneca Lake, where water heated during the extraction process is returned to the high temperature lake. But they also come with broader concerns about carbon emissions and energy consumption associated with blockchain; through an estimation, bitcoin as a whole consumes more electricity each year than Austria. Although Greenidge and many other mining companies have bought carbon offsets to become carbon neutral, critics say this ignores opportunity costs – after all, we just can’t offset.

Kelles is also concerned about the opening of new mines. “If you look at the list of power plants that are on the back burner, they are in Queens, Suffolk County, all over the Finger Lakes and all over Long Island,” she said. “Not all of them would have the infrastructure to be cryptocurrency mining facilities, but there is potential there.”

The moratorium bill failed in the state assembly in June, and more mining operations are indeed coming to New York: In March, a company called Digihost bought a 60-megawatt natural gas-fired plant north of Buffalo for $ 3.5 million, with plans to turn it into a bitcoin mine.

Crypto mines have settled in a variety of former industrial spaces, including this WWII-era hangar.
Photo: Courtesy of Compute North

Despite concerns expressed by lawmakers and environmental groups, many states are keen to attract minors. Both North Dakota and Wyoming have been successful laws that grant tax breaks to oil producers who supply gas to crypto mines that would otherwise have burnt down. The governor of Kentucky recently passed a tax break for all minors entering the state. And Texas Governor Greg Abbott recently signed a law that recognizes the legal status of cryptocurrencies and the rights of those who hold them. The message from these red-trending states: Crypto miners are welcome here.

Compute North, which specializes in developing spaces for crypto miners, already has a facility in Texas, based in a former WWII aircraft hangar, and CEO Dave Perrill said many projects currently in development are Texas, which is one of the most crypto-mining friendly states in terms of low-cost and stranded energy. Compute North also has other operational centers in South Dakota and Nebraska, and 40 more sites are currently at some stage in the development process.

Still, there are hurdles for crypto miners – and at least in part because of the intensity of the real estate market. Instead of looking for abandoned buildings, some customers instead come to Compute North for prefabricated modular mine sites built in shipping containers that can be placed anywhere near a cheap power source. They set up such a site in Kearney, Nebraska – a set of modernized shipping containers in the middle of an empty, roaring green field.

But the race for post-industrial space is still on. Colyer said he regularly receives several emails a day from miners who have material and are looking for advice on where to put it. He said: “Everyone is running around and looking at spaces and sites, asking, ‘How do we turn this into a bitcoin mining facility?'”

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