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New Denton cryptocurrency mining facility promises high revenue, raises environmental impact concerns

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The city of Denton has leased 31 acres of vacant land near the Denton Energy Center to cryptocurrency mining company Core Scientific Inc., which will use the space to power a blockchain data center warehouse.

“The amount of revenue that could be generated could match up to the amount of annual debt service or the annual payment that we make on the debt for Winter Storm Uri, which is about six-and-a-half to seven million [dollars] a year,” Denton Executive Manager of Utilities Tony Puente said.

The city will lease the land to Core Scientific for seven years for a rate of $10,075 a month, with the option to renew for seven more years. Core Scientific will develop a 300-megawatt blockchain data center using emissions-free power supplemented by renewable energy credits, according to a Core Scientific press release.

A blockchain is a distributed digital ledger that stores data of any kind, including record information about cryptocurrency transactions. The technology allows individuals to securely deal in cryptocurrency without an intermediary like a government, bank or other third parties. Blockchains make it “nearly impossible” for someone to hack into or cheat the system, according to Forbes.

City officials said when the operation begins in the coming months, the energy used by the facility’s computers and cooling systems will double the power used by Denton Municipal Electric customers. The blockchain warehouse will not put any further strain on the electric power grid, officials said. In the event of a power emergency, the facility can be powered down immediately and can send unused power to the Electric Reliability Council of Texas.

The North Texas Daily reached out to Core Scientific, but the company would not comment regarding the leasing agreement or how it operates.

The crypto mining operations carried out by companies like Core Scientific can result in potentially large financial rewards, as Bitcoin is valued at $56,172 at the time of publishing. Core Scientific expects to hire 16 people to run the facility for 24 hours a day, according to the Dallas Morning News

Denton City Council members voted 6-1 for the approved leasing agreement during the Aug. 24 council meeting. 

Denton City Council member Deb Armintor, who voted against the leasing agreement, said she was shocked to see her fellow city council members vote in favor of it. Armintor said the risk of the agreement is a gamble with taxpayers due to the unregulated ERCOT grid and the impact it may have on the environment. If Bitcoin was a country, it would rank as the 34th highest electricity consumer, according to the Cambridge Bitcoin Electricity Consumption Index at the time of publication.

“When you look at the instability of Bitcoin mining, and the shakiness of it, I have no reason to trust that these projections are based on anything other than just pure speculation,” Armintor said.

Brian Beck, the council member representing District 2, said while the electric grid does have natural gas, it will also provide renewable energy such as solar and wind energy power for Core Scientific. Denton City Council member Paul Meltzer said the agreement will allow the electric grid to be more stable for homes, businesses and hospitals if another event like Winter Storm Uri occurs. Meltzer also said it will help with the city’s sustainability fund by incentivizing energy efficiency.

Beck said there has been confusion from Denton residents regarding the leasing agreement with Core Scientific. Public documents refer to the blockchain warehouse as only a data center and the power purchase agreement between Denton and Core Scientific attached to city ordinance 21-1364 is partially redacted.

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“We’re not buying Bitcoin or selling Bitcoin or investing in Bitcoin,” Beck said. “There’s no relationship with the cryptocurrency industry, other than the fact that there’s a company that we’re selling power to.”

Article Originally Published by Juan Betancourt on North Texas Daily

Source: North Texas Daily

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