May 27th, the Hearing Examiner released his ruling authorizing the Conditional Use Permit for the Bitmain/Allrise Capital Crypto Facility at the former PNC Mill Site near Usk. A copy of the CUP decision is available to download below.

However, at a special meeting on May 26th, the Pend Oreille PUD revealed that the expected electricity provider for the proposed Bitmain/Allrise Capital industrial cryptocurrency mining facility has withdrawn from the project, leaving the Bitmain/Allrise without a power source. The electricity provider Brookfield Renewable operates several hydro facilities in British Columbia and was expected to provide at least 100 MW of electricity to the Bitmain/Allrise Capital facility through the PUD. 

Bitmain/Allrise Capital, in partnership with the PUD, will now need to find a different power provider before they can begin industrial-scale operations. This increases the risk that the start of large-scale operations could be delayed. Allrise Captial and its subsidiary, Merkle Standard LLC, have been negotiating a power contract with the PUD and Brookfield Renewable for around nine months before Brookfield Renewable withdrew. Brookfield did not provide an explanation for their decision. 

During the special meeting, the PUD also indicated that Brookfield Renewable's withdrawal also increased the risks to the PUD and its existing customers in the county and that the increased risk levels would need to be factored into future negotiations. 

Brookfield's abandonment of the project comes during a volatile time for crypto currencies in general as crypto currency prices have sharply declined in the last couple weeks deterring many investors while energy prices are growing.

The PUD appeared committed to helping Bitmain/Allrise find a new energy provider but also emphasized that they had a responsibility to protect existing customers from a repeat of the PNC Mill bankruptcy which left customers responsible for $15 million in energy contracts that the mill reneged on leading to a rate increase.

From Dallas Becker:

Not only do cryptomining facilities have a negative impact on the environment, due to that negative impact, the cryptocurrency industry is shifting away from the transaction model that uses them.  It is very plausible that due to consumer/investor demand and government regulation, proof-of-work currencies (which use cryptomines) will be replaced by proof-of-stake currencies in the very near future.  This change is happening quickly in the cryptocurrency industry right now - the proposed facility may only operate for a year or two.

My attempt at a summary:

Proof of work:

• Uses cryptomines, like the proposed facility.  Many computers crunch away at complex mathematical problems, and finding the "answer" is rewarded with cryptocurrency.  But this is like a race - in that many (ie, 100,000 computer clusters) are competing and only the winner gets the cryptocurrency
• Effectively, the process is electricity->computational power->cryptocurrency - for the winner.  Many other computers have just converted electricity into calculations, with no result or reward.
• "Baked into the code is a reduction of the reward over time, and there is a fixed supply of Bitcoin that will ever exist, so the mining becomes likely more difficult over time depending on how many computers are competing at any given moment."
• Environmental impacts are due to the large computational power and equipment needed.
• This is the older method; it is criticized for the poor energy efficiency.  Newer cryptocurrencies use proof of stake and some older cryptocurrencies are moving to proof of stake.
• China banned cryptomining in 2021

Proof of stake:

• Instead of racing to solve a mathematical problem, the verifiers have an investment stake (ie, money) - in a way, a bond for good behavior.  There is a lottery, based on the size of the stake, for who verifies a transaction and is rewarded.  
• "Proof of stake is expected to reduce the electrical consumption of crypto-mining by well over 99%." and "Proof of stake offers a way to set up such a network without requiring so much energy. And if all goes as planned, Ethereum, which runs all sorts of applications in addition to the world’s second-largest cryptocurrency, will transition to it in the first half of 2022. The shift has been projected to cut energy use by 99.95%."
• One of the biggest cryptocurrencies, Ethereum, is planning to fully convert to proof of stake this year
• This model is much faster than proof-of-work and more scalable.

Editors Note: For a description of "Proof of Work," see our previous blog post "Once you realize what Proof of Work is really about, you'll get even more angry" - PROTECT PEND OREILLE

Here are some articles:
https://www.thomsonreuters.com/en-us/posts/investigation-fraud-and-risk/5-questions-crypto-mining/

https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/what-is-staking/

https://www.pymnts.com/cryptocurrency/2022/can-proof-of-stake-solve-cryptos-esg-problem/

https://www.cnbc.com/2022/03/09/heres-whats-in-bidens-executive-order-on-crypto.html

https://www.forbes.com/advisor/investing/cryptocurrency/proof-of-stake/

Ms. Becker is a resident of Pend Oreille County who loves the beauty of our county and wants to ensure this pristine place that is our home is preserved for generations to come.

In presentations to the public Merkle Standard representatives have repeatedly advertised that they are looking for someone to use the excess hot water from cooling their cryptocurrency mining machines. This so-far unanswered advertisement is a mea culpa confession that Bitmain/Merkle Standard will produce substantial amounts of hot water that it does not currently have a plan to dispose of. 

Where is all of this hot water coming from? The Conditional Use Permit (CUP)/ State Environmental Protection Act (SEPA) Checklist application CUP-2021-012 submitted by Ponderay Data LLC on behalf of Bitmain and Merkle Standard is incomplete, ambiguous and sometimes contradicts itself. 

So what do we know? 

CUP-2021-012 describes two types of systems that use water. 
1) 150 Modular Data Centers  (MDC -- these are the white shipping containers in the parking area of the former PNC Mill site in Usk). 
CUP.F.4 of the CUP application states: "process water lines will be extended to the MDC's."
CUP.E specifies "process water from the Pend Oreille River" which is differentiated from "two wells for potable water."
SEPA.B.3.b.1. states: "The MDCs are fitted with evaporative coolers that will be operated when the ambient temperature exceeds 95F. It is anticipated that no water will be discharged to groundwater in their operation. The water supply will be from the existing mill ffreshwatersystem."

Base on press releases by Merkle Standard, the 65-120 of their MDCs, and the ones described in CUP-2021-012, are Bitmain-produced Antbox N5 containers (pictured below) each holding 207 S19 XP and S19J Pro air-cooled computers inside. These containers use a supplemental evaporative water-cooling system (circled in red) that MUST be engaged when the air temperature at the air intake is 95F. It is important to note that exhaust air of a single mining computer produces so much hot exhaust that it can heat a townhome, so 13,500 to 25,000 of these computers densely packed together will make the air intake temperature much higher than the air temperature at the local weather station. Furthermore, unless the system has 100 percent evaporative efficiency, there will be hot water left over.

2) "A small Data Center in the former construction office building will require two cooling towers 8'x16'x16' high." (SEPA.A.11)
SEPA.A.10. "An operating permit may be required for the cooling towers."
SEPA.B.2.a. "Water vapor will be evaporated from the cooling towers."
SEPA.A.7 "The cooling towers will not be commissioned until May 2022 or later."

No other specific information is reported about these cooling towers.

However, we know from Merkle Standard press releases and public statements that Bitmain/Merkle Standard will deploy a third type of water using system at the site that is not mentioned in CUP-2021-012. This system is the Bitmain-produced Antspace HK3 container holding the S19 Pro + Hydro mining computer. The key difference between this type of MDC and the ones described in the CUP/SEPA application is that this type uses water as the primary cooling system for its specially built, water-cooled mining machines with a secondary air-cooling system. The mining computers used in each type of MDC are not mutually compatible-- each type requires its own specialized type of MDC. 

The Antspace HK3 (pictured below) actually comes with two containers: one to hold the mining computers, the second to hold a container-sized cooling tower. The mining computers in the first container are cooled by a closed-loop water system with each of the 210 computers requiring more than two gallons of cooled water each minute. After passing through the computers the water in the closed-loop system is pumped over to the cooling tower where a combination of a large cooling fans and a water spray cool the water down to 95F before pumping it back to the computing container. Altogether the system holds over five tons of water at any moment. 

​The water spray system is designed to spray 61,500 gallons per hour to cool the closed-loop system. Some of this water is converted into water vapor (SEPA B.2.a "Water vapor will be evaporated from the cooling towers.") while some water drips back into collecting tanks at the bottom of the cooling tower where it is pumped back into the spray system. In total each container consumes 265 to 400 gallons of water per hour. Just the 23-26 known cooling towers would consume 220,800 - 250,000 gallons of water each day excluding water required by the evaporative cooling systems for the other 65-120 MDCs. The spray cooling system appears to be optional once air intake temperatures drop below 50F. Bitmain/Merkle Standard reps have publicly stated that they will going with more water-cooled machines (which are the most power efficient) and cooling towers in the future. 

Given that the dimensions for the cooling towers for the "small data center" are approximately the size of a container and that the Antspace HK3 equipment was not slated to arrive until May, it is possible that these cooling towers are also the Bitmain-produced towers used with the Hk3 MDC.

A few additional points: 

A closed loop cooling system requires antifreeze and may require either chemical treatment or regular replacement due to minerals and biotics in the "process" river water used which would degrade the cooling system. Where will that water go? None of this is addressed in CUP-2021-012.

There are several contradictions as well:
1) The MDCs use evaporative cooling (SEPA.B.3.b.1.) but have no emission (SEPA B.2.a). 
2) The MDC use process water from the river (CUP.F.4) but there will be no surface water diversion (SEPA 3.a.4).

So there is a lot of hot water. Where is it all going?

Sources on Antspace HK3 cooling tower specifications:
https://shop.bitmain.com/product/detail?pid=0002021123118285350583K2a0P505EF
https://minefarmbuy.com/product/antbox-hk3-complete/

Bitcoin "mining" is a concept that is difficult to explain. In the recent Daily Beast article "Crypto Mines are Making Life a 'Daily Hell' for This Tiny North Carolina Town," university researcher Alex de Vries provides a good explanation of the Proof of Work protocol colloquially described as "mining." And he believes that his explanation will make you even more angry about the likely impacts on our community.

 “Once you realize what Proof of Work is really about, you’ll get even more angry,” Alex de Vries, a researcher of sustainability of crypto assets at the at the Vrije Universiteit Amsterdam, told The Daily Beast. Information is added to a public database called the blockchain in units called blocks. “For every block that is created, whoever creates that block gets a reward of 6.25 bitcoins,” de Vries, who is also the creator of Digiconomist, a platform that has documented Bitcoin’s energy usage, explained. “Now, there’s a big catch to that, because in order to be able to create a block, you actually have to participate in what is effectively a massive number guessing game.”
Only the machine that guesses this number correctly can create the next block. “The whole Bitcoin network is just generating 200 quintillion of guesses every second of the day, nonstop,” de Vries said. “The more computational power you have, the bigger your chance of getting lucky and being the one to obtain that reward.”

This cycle continues in perpetuity every 10 minutes to create a block that holds, on average, information for about three transactions. “The noise that people are hearing is just machines playing a guess-the-number game. And pretty much all of that information they generate is completely useless,” de Vries said. “It’s not like, if they guessed incorrectly, that it has any further purpose. It’s just immediately discarded.”

Read the complete article HERE.

​New data shows that Bitmain/Merkle Standard’s proposed Bitcoin Mining Facility in Usk could be at least 10x Louder than alleged in their Conditional Use Permit Application.
 
In the Conditional Use Permit Application CUP-2021-012, Ponderay Real Estate LLC (acting on behalf of Bitmain and Merkle Standard LLC) asserted that the noise level for their facility would be 75 dB. In our video At Least 5x Louder   Analysis of Crypto CUP Application, we presented five reasons this number was both misleading and demonstrably false, and that noise levels would be at least 5x louder.
These reasons include:
They only list the noise for a single machine, not 150 containers with 30,000 machines;
They left out the loudest pieces of equipment, and;
That the 75 dB number was itself suspect because the noise levels increase as temperature (and fan speed) increase.
 
An alert reader provided us with a  product review video from the website CryptoMinerBros.com which sells the same bitcoin mining machines that Bitmain/Merkle Standard/et al. currently has at their proposed Usk Bitcoin Mining Facility – in this case, the S19J Pro.
 
In the product review video (see the screenshot below), the reviewer reports that the noise increases to 85 dB when the miming machine is hot. That is twice as loud as the sound rating for a single mining machine reported in the CUP application and loud enough to cause hearing damage.
 
Later in the video, the reviewer comments that a single S19J Pro mining machine produces enough heat to heat his entire home. Imagine the operating temperatures inside a metal shipping container packed with 207 machines on a summer day in the sun. Running hot will be the rule, not the exception.
 
Because noise is additive, at 85 dB per machine, ten machines together will produce 95 dB of noise, which is like putting your head next to a motorcycle engine. A single container of 207 of these densely packed machines pushes the noise level to 108 dB – the same volume as a Rock Concert.
 
That is more than 10x LOUDER than the CUP application asserts!

Watch our video presentation here: At Least 5x Louder   Analysis of Crypto CUP Application