Cryptocurrency investments expected to boost N.D. GDP, but it’s not all smooth sailing

BISMARCK (KFGO) – Cryptocurrency markets have been known since their inception for volatility and risk, and last year’s collapse of crypto exchange FTX and more recent lawsuits like the one the U.S. Securities and Exchange Commission filed against Binance, the world’s largest crypto exchange, have served as high-profile reminders of the uncertainty that swirls throughout the industry. But North Dakota’s Commerce Commissioner says despite the turbulence, investments made in the digital currency market have set North Dakota up for significant returns.

An analysis done by the ND Commerce Dept. found that cryptocurrency datacenter operations are projected to spend $197 million on energy in North Dakota in 2023, creating over 1500 direct and indirect jobs and boosting the state’s gross domestic product (GDP) by over $309 million.

There are currently six known operating cryptocurrency datacenters in North Dakota, with the Applied Blockchain center in Ellendale currently using the largest energy capacity, according to the state Commerce Department’s analysis. The next biggest are a second Applied Blockchain datacenter in Jamestown and the Core Scientific in Grand Forks. Atlas Data Center in Williston is expected to grow to be the state’s – as well as one of the nation’s – largest this year. Rainbow Energy outside of Bismarck is the state’s smallest crypto datacenter.

Commerce Commissioner Josh Teigen says the state is uniquely positioned to reap the benefits of the growing sector, particularly when the margins start to thin as they did when FTX crashed, and more importantly when the Russian invasion of Ukraine caused power prices to skyrocket globally. And that, Teigen said, is thanks in large part to North Dakota’s utility companies doing proper due diligence up front to ensure the projects would be economical, even in times of downturn.

“There’s only certain places where the economics work. The big projects – the Atlas, Core, Applied – they’ve all said their sites in North Dakota are profitable, because when our utilities looked at it they said ‘We’re not going to jump on board with the hype of everything. If we’re going to do this let’s think it through and let’s do it right.’ So, these big companies have mining operations all over the U.S. and all over the globe, and sometimes the only location that’s actually making money is the North Dakota one,” Teigen said.

Teigen said companies could come and go at this point, but North Dakota’s infrastructure is such that it will continue to be of use.

“I’ve talked with the utilities and they all feel really comfortable, because even if some of these companies declare bankruptcy, there will always be a market for a cash-flowing, productive asset and the infrastructure that exists in North Dakota should be resilient, barring any major market swings in either the power price market or the Bitcoin market moving forward,” Teigen said. “In other parts of the country the power producers and utilities built out all this infrastructure and didn’t really monitor the tons of upfront investment that was made, and now those sites just sit just idly, not being monetized versus in North Dakota, there’s still a high level of confidence that these investments were good ones.”

A recent story in the New York Times analyzed the pressure on the power grid and carbon footprint created by crypto mining. It cited analysis that found that half the state’s mines together consume nearly as much power as every home in North Dakota.

Teigen says the conversation about the harm crypto mining can cause due to fossil fuel emissions is short-sighted because it doesn’t take into account the state’s carbon-capture capabilities and goals to become carbon neutral by 2030.

“We’ve pioneered carbon sequestration technology and the permitting process and we have the geology to do it. So we can have a zero-carbon coal-fired power plant that has the same carbon footprint as a wind turbine, but it’s more reliable and is more affordable,” Teigen said. “Bringing in big customers like these data centers will actually help accelerate the decarbonization of fossil fuels and help free up transmission capacity for renewables.”

Teigen said “well north” of a billion dollars in capital has been invested in datacenter infrastructure in North Dakota so far, but rushed efforts by crypto firms to add capacity haven’t been without controversy. In Williams County, the county commission voted unanimously Tuesday morning to cut the power to phase II of the Atlas Data Center’s project in Williston. The company was far behind on completing roads, facility security and coverings, and other basic construction and noise mitigation it promised to complete months ago in order to receive a certificate of occupancy. The commission has heard dozens of citizen complaints and documented multiple zoning violations during the project’s construction. Atlas had until June 16 to complete the work.