Bitcoin miners hope to strike a bonanza at the contaminated New York site where General Motors Co. once manufactured parts for its ill-fated Corvair.
The Massena, N.Y., property’s location and access to large amounts of electricity are drawing attention from the cryptocurrency industry. The area could be an ideal opportunity for cryptocurrency operations, people involved with the contaminated sites said.
A “couple of parties” involved in blockchain technology are interested in buying and developing parts of the Massena site, even though New York has banned cryptocurrency miners from buying power from a nearby dam, Bruce Rasher, redevelopment manager for the RACER Trust, which owns the property, told Bloomberg Environment.
The site once housed a landfill and a GM die-casting plant—operations that left the property contaminated with polychlorinated biphenyls, which the Environmental Protection Agency said cause cancer in animals, and volatile organic compounds.
Finding new ways to market formerly toxic sites aligns with EPA Administrator Scott Pruitt’s push to speed the redevelopment of Superfund sites, often seeking novel uses for once-contaminated properties.
The site may actually be attractive to cryptocurrency miners thanks to a nearby electric dam, Aaron Tilton, president and chief executive officer of Blue Castle Holdings, told Bloomberg Environment.
Tilton’s company explores locations and helps cryptocurrency companies build high-density energy capacity for their operations. Mining businesses need as much as 300 megawatts of electricity—half the power a typical coal-fired power plant generates—to operate.
Cryptocurrencies, such as Bitcoin, are a type of digital currency that is encrypted, or converted into a code, to increase security. A blockchain is a record of transactions made with cryptocurrency and secured with encryption. For Bitcoin, miners require loads of energy to perform calculations that generate units of the cryptocurrency.
Companies and investors are interested in those technologies because they store data in multiple locations, greatly reducing the possibility that a hacker could release sensitive information by attacking a single point, Kevin Kelly, a Bloomberg Intelligence equity strategy analyst, told Bloomberg Environment.
From Brownfields to Bitcoins
Bitcoin miners need three conditions to set up shop: cold weather to keep servers cool, cheap electricity, and a favorable business environment, Mike McGlone, Bloomberg Intelligence commodity strategist, told Bloomberg Environment.
A U.S. Bankruptcy Court settlement created the RACER Trust in 2011 and ordered it to prepare former GM sites for redevelopment. The trust is the one of the largest holders of industrial property in the country.
Brownfields could be suitable locations for cryptocurrency operations, Dan French, chief executive officer of Brownfield Listings, told Bloomberg Environment.
Brownfields are properties where redevelopment is restricted or complicated by the appearance of contamination or actual contamination. The requirements for building data centers, solar power generators, and cryptocurrency operations are similar, and many brownfields can accommodate them, French said.
The sites don’t create high volumes of traffic and don’t need many parking spaces, and computers won’t mind poor facility conditions, he said. They do have to be safe for maintenance workers and cleaning crews, however.
“Tell me if that doesn’t sound like a lot of decommissioned, surplus, and mothballed industrial and heavy commercial sites,” French said in an email.
The EPA has not been involved with any other Superfund sites marketed to cryptocurrency companies, Albert “Kell” Kelly, Pruitt’s adviser on Superfund issues, told Bloomberg Environment.
A subsidiary of Tilton’s company, Power Block Coin Inc., is planning to build a compound of data centers in Butte, Mont., near a federal Superfund site. The presence of the Superfund site didn’t influence the decision to build there, Tilton said.
New York Balks
The RACER Trust’s Massena site has access to hydroelectric power, provided by the New York Power Authority’s St. Lawrence River dam. Half the dam’s turbines can produce enough energy to power Washington, D.C., according to the authority.
The New York State Public Service Commission, however, decided March 15 that municipal power authorities could charge higher energy rates to cryptocurrency companies requiring large amounts of power. The power authority has placed a temporary moratorium on awarding electricity to cryptocurrency mining companies while it develops a policy for power-hungry customers.
The RACER Trust has continued to market the Massena site as an ideal location for cryptocurrency operations, including bitcoin mining, despite New York state’s new restrictions.
The moratorium “does not mean that discussions have ground to a halt,” Rasher said.
Part of site is ready for redevelopment. The trust could sell the entire site, including parts that are still contaminated, if a buyer were interested in cleaning up, he said.
The cryptocurrency companies interested in the Massena site understand that they will need a long-term, reliable, cost-effective energy contract, and have been discussing the details with the New York Power Authority and others, Rasher said.
The trust is accepting offers for the site until April 20.