NZ hydro-powered data center will curb crypto mining if locals need energy

An impending data center for mining crypto near one of New Zealand's largest dams has locals concerned about noise and energy shortages.
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The owners of a hydro powerplant on New Zealand’s South Island are hoping to assuage local concerns about a new crypto mining project, reports Stuff. 

UK-based Lake Parime plans to power a 368-server data center with around 10 megawatts (MW) of hydropower energy from the Clyde Dam in Otago.

The startup produces self-contained data centers, which it dubs “Power Boxes,” to make use of so-called “stranded or undervalued” electricity.

  • Clyde Dam is the third largest in New Zealand.
  • It’s capable of producing 432 MW of power from its four turbine generator units.
  • According to Waterpower Magazine, the dam is responsible for 6% of New Zealand’s energy supply.

Critics of the impending data center near the Clyde Dam are concerned that the valuable renewable energy will be diverted from the local community in favor of crypto mining.

Bitcoin and Ether persist as two of the most commonly mined cryptocurrencies.

Lake Dunstan Charitable Trust Board chairman Duncan Faulkner, a software entrepreneur, said the data center provided no benefit to the community.

Contact Energy, which maintains hydropower efforts around Clyde Dam, is however pressing on with development despite the pushback.

Murray Dyer, general manager at a related Contact Energy subsidiary said (via Stuff):

“The key issue is we can ramp that [energy] up and down. So, if that energy is required for critical local businesses and consumers, then we can turn that data center down and that’s written into the contract.”

More crypto mining in New Zealand on the cards

Lake Parime’s crypto mining project was given the go-ahead in March with hearings held in February. Concerns over potential misdirection of power and noise pollution were reportedly raised.

Three oppositions focused on the noise to be generated by the data center were formally recorded. Although, none of the opposing parties gave evidence at February’s hearing. 

The eight containers housing the servers will be enclosed by a noise mitigation wall, according to their government applications. Expected noise output was found to be within council noise limits.

In a statement on Friday, Contact Energy hinted at the prospect of more crypto mining projects attached to their sites.

The firm owns and operates 11 power stations. Contact Energy says it produces 80-85% of its electricity from renewable hydro and geothermal stations.

“The Lake Parime data center is the first project from our pipeline of opportunities to grow industrial demand for electricity from industrial users in the lower South Island,” it said (via Stuff, our emphasis).

Hydro-powered crypto mining projects elsewhere have attracted similar criticism.

Read more: [‘Struggling’ coal plant emits 500% more carbon after Bitcoin mining revival]

Still, Contact Energy was keen to highlight other applications of data centers. “Lake Parime will use the data center for a diverse range of high performance computing applications,” said the company.

“This may include blockchain and cryptocurrency, but also other decentralised computing activities such as machine learning, economic modelling and data visualisations.”

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