North Texas Daily

Core Scientific Inc.’s blockchain data center warehouse that began construction late last year in Denton is now operational but facing roadblocks regarding internet capabilities.

The project is expected to be completed in December this year but discovered during testing that the installed network communication methods did not provide sufficient bandwidth to supply full data to the facility’s computers. Because of this, the city is looking into leasing fiber optics to Core Scientific.

“I think it’s an opportunity for us to test-bed and fine-tune options for fiscally responsible but also sustainable business practices, particularly for large-energy-scale industrial uses,” Denton City Council member Brian Beck said.

Beck was initially against Core Scientific’s proposal for the cryptocurrency mining facility but ended up voting in favor of the facility’s construction after he said he recognized that the revenue from the facility could be used to better Denton’s sustainability practices.

Core Scientific did not respond to requests for comment.

On completion of three phases, the bitcoin mining facility will cover 30 acres, according to a presentation given to the city council in June 2021. The facility is made mostly of buildings filled with computers that utilize application-specific integrated chips specifically designed for cryptocurrency blockchain calculations. These calculations are a complex process that eventually help create new bitcoin, which is valued at $42,451 as of March 22.

Since the proposal for the facility was first presented to the city council, there have been concerns both from public officials and citizens about the effects the facility could have on the city’s power grid, as well as the environmental ramifications of utilizing large amounts of power. On completion, the facility is expected to use 300 megawatts of power, more than the entire city currently uses.

Council member Deb Armintor is urging city council to vote against the construction of the facility, as they feel that providing fiber optics would be a step in the wrong direction.

“It means the city would be doing additional favors for this business that we don’t do for other business, and I am totally against it,” Armintor said. “I’m going to pull it for individual presentation and vote no.”

While opponents of the facility such as Armintor highlight its environmental effects and their hesitance to get involved in the cryptocurrency business, measures have been put in place to minimize the ecological footprint of the project. Part of the city’s agreement with Core Scientific requires the company to buy renewable energy credits, or RECs, to offset the effects of the mining facility’s electrical needs. RECs are investments that go to funding an equal amount of clean energy for the unclean energy used, creating net carbon neutrality.

“Since a REC is not generated unless there is a corresponding megawatt of renewable energy produced, and the program is administered by ERCOT, RECs are the best practice to ensure that an equivalent amount of carbon-free energy was generated,” said Terry Naulty, assistant general manager of Denton Municipal Electric.

Naulty also noted that the city does have a standard practice on record by which it can lease unused fiber optic cables to private businesses.

Many of the conditions of the project’s business agreement with the city were made to address the concerns of the public, especially after last year’s winter storm. In times where the city needs power, the mining facility can reroute all of the electricity it uses back to the power grid for other uses, a process that would only take minutes, Beck said. The city incentivized this cooperation by offsetting the project’s production costs whenever power is turned off.

A presentation by Naulty to the city council in August 2021 stated the facility would make $5.8 to $7.4 million available to the city in incremental general fund revenue per year.

“I see it as an opportunity to figure out what works well for Denton and what doesn’t, while still adhering to our sustainable, environmental and quality-of-life priorities and advancing our citizen-approved strategic planning goals,” Beck said.

Denton City Council was given a presentation on the fiber optics lease on March 22 and will vote on the measure at a later date.