Jay Jorgensen is a believer in bitcoin—and, he contends, in solving the problems that give the cryptocurrency mining industry a bad climate reputation.
In 2014, he was an early investor in bitcoin, which was fluctuating from $100 to $1,000 in value. In 2017, he struck gold when that shot up to $18,000. But his faith in the currency went beyond the big returns he was seeing.
He appreciated the lack of a central bank authority, with transactions rapidly validated on the public ledger known as the blockchain that is maintained by users without fees. “I’ve always been fascinated with the technology of decentralization,” he said in an interview.
That those transactions are validated, or mined, with computers solving complex puzzles has made the industry a target for climate advocates, however. The fastest computer to solve each problem, often the one with the most data processing power and therefore the most energy consumption, is rewarded with bitcoin for its validating services. The process also generates enormous heat at data centers, requiring additional electricity for air-conditioning.
To make crypto-mining more sustainable, Jorgensen said he found a “solution within the problem.” His company, GeoBitmine, is using patent-pending technology to pump waste heat from each crypto-mining center into an adjacent greenhouse where it keeps temperatures ideal for growing year-round while reducing heating costs for farmers.
Jorgensen plans to debut the system in his home state of Idaho at the former J.R. Simplot potato processing plant in Aberdeen, an eastern town of fewer than 2,000 people. But the local utility company is concerned about the viability and volatility of cryptocurrency mining operations, which require lots of energy to run—in GeoBitmine’s case, six megawatts of power a year, according to Jorgensen.
Idaho Power says it may need to invest in new generating capacity to meet the demand from such companies. The success of those ventures is tied to currencies that have seen enormous losses in the last several weeks alone, the utility says, and it worries that crypto-mining companies could quickly leave the state for better rates elsewhere or go out of business altogether. The utility argues that this could leave it saddled with “stranded assets,” or power generation that isn’t being used or paid for.
So Idaho Power has created a separate designation for customers in the region engaged in high-energy crypto-mining, although none have fallen under this designation yet. Companies in that category would face potentially higher rates and the prospect of summer outages—a status that Jorgenson says is discriminatory and unworkable for his business.
GeoBitmine has petitioned the Idaho Public Utilities Commission to strike down the designation, but Idaho Power insists it has the authority to treat cryptocurrency miners differently. The commission is expected to make a decision on the case by the end of this week and as early as Wednesday.
Jorgensen says he is optimistic that the decision will be in his favor and GeoBitmine and Idaho Power will be able to reach an agreement. “We want to be allies,” he said. “We’re excited to put Idaho Power on the map with this technology.”
Mining Cryptocurrency and Growing Food
GeoBitmine seeks to solve two problems: the unsustainability of energy-hungry crypto-mining and a lack of local food options in rural communities. By providing a dual use for the energy it consumes, the venture would reduce the waste of energy from crypto-mining while meeting a need to grow food locally and economically, according to company documents.
Here’s how the technology works: A 10-by-40-foot unit containing 360 bitcoin-mining computers, known as a “geopod,” generates enough energy to heat a one-acre greenhouse. The geopod is attached to the greenhouse by a heat capture system of fans and ducts that siphon the heat into the greenhouse and maintain a temperature of around 70 degrees Fahrenheit in the greenhouse and 85 degrees in the geopod. The greenhouse is also lined with solar panels to support the operation with additional energy that is clean.
“All we’re doing is taking one form of energy and transforming it to another form of energy,” Jorgensen said in an interview. “Taking electricity, transforming it to heat—that heat is transforming into local food growth, and that food is feeding the people in the area. That’s what made our model very unique and different from any other bitcoin-mining company.”
The pilot project, projected to begin by the end of 2023 if a utility deal is reached, includes three geopods that are linked to a 30,000-square-foot warehouse filled with infrastructure for indoor, vertical growing at the former processing plant in Aberdeen. GeoBitmine is working to secure a public-private partnership with the University of Idaho’s agricultural extension program to conduct seed research in the greenhouses. Jorgensen hopes the warehouse will later be used to grow food for the local community.
He said that an angel investor had pledged $80 million for GeoBitmine, $17 million of which would be used to start the Aberdeen operation. He also suggests that the cryptocurrency site could bring dozens of technology and agricultural jobs to the community, a possibility that has piqued the interest of the Regional Economic Development for Eastern Idaho (REDI) organization. Teresa McKnight, CEO of REDI, says she is interested in GeoBitmine because of its promise to not only mine cryptocurrency but also support university research and kickstart a farming operation that could potentially supply local restaurants.
A Challenge for Power Companies
Idaho is a desirable destination for cryptocurrency mining. Electricity rates are relatively low, and renewable energy, largely hydroelectric power, makes up more than half of the portfolio of Idaho Power, one of the state’s major electric utilities.
Interest in cryptocurrency mining in the state and in the U.S. has surged since China banned cryptocurrency mining last year. Idaho Power reports that 17 large-scale cryptocurrency mining operations that would jointly consume nearly 2,000 megawatts of electricity have inquired about establishing operations in its service area.
The utility currently generates 3,400 to 3,700 megawatts of electricity for all of its customers combined. Leaders of Idaho Power fear that if a substantial number of cryptocurrency mining businesses begin using its services, it will be unable to meet the needs of all of its customers in the summer, when temperatures are hot and the demand for power is high.
The utility could invest in new resources to generate electricity, but if its suspicion that these businesses will go under is borne out, Idaho Power could be forced to pass on those costs to other customers, a spokesman for the utility, Jordan Rodriguez, said in an email. The recent cryptocurrency crash has deepened that concern: Bitcoin, the most popular form of the currency, has lost more than half of its value in the last four months. “Because cryptocurrency mining is speculative, requires a lot of energy, and can relocate quickly and easily,” Rodriguez said, “that pattern of energy use creates certain risks for Idaho Power and our customers.”
To protect itself, Idaho Power established the separate designation for crypto-mining operations, known as Schedule 20, which went into effect on June 15 after approval by the Idaho Public Utilities Commission. Under this policy, crypto-mining operations would be subjected to power interruptions during peak demand on summer afternoons and evenings with as little as two hours of warning. The ventures would also pay marginal rates, meaning that they would be charged for power that the utility imports on the spot to meet excess demand, which tends to be more expensive.
GeoBitmine would be the first Idaho Power customer to fall under this new schedule. But Jorgensen hopes it won’t have to.
Potential Power Interruptions and Rate Spikes
Idaho Power’s concerns are legitimate, he acknowledges. “Power companies want to know they’re going to get paid for providing that energy,” he said. “They also want to know that we’re not going to be taking away energy in peak hours from the homes or the other businesses that are in need of that energy.”
But he contends that GeoBitmine will not cause those problems. To make that case, GeoBitmine’s attorney, Peter Richardson, filed a petition for reconsideration to the utilities commission on July 6 after learning that the business would fall under the Schedule 20 designation.
The petition argues that Idaho Power lacks the authority to treat GeoBitmine differently from any other customer that demands a high load of electricity. Idaho Power filed a response to the petition on July 13 disputing GeoBitmine’s…