Bitcoin Hubs bask in Entergy’s glow | Arkansas Business News

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There is no gold in the hills of Arkansas, but cryptocurrency developers are putting their claims on hold in the state, which is attracted by cheap electricity and the open arms of economic developers.

The progress of three multi-million dollar bitcoin mining projects in Newport contrasts with Pine Bluff’s recent rejection of a proposed center in a residential setting that provides a homegrown example of the prospects and risks faced by crypto entrepreneurs in a new and controversial industry.

United BitEngine, Juice Tech and GMI Computing announced plans to open crypto-mining service centers in Newport this year and early 2023, and United BitEngine quietly began operating a center in Conway County in June. Juice Tech, which has a bitcoin hub near Dallas, is installing centers in Walnut Ridge and near the state fairgrounds in Little Rock.

“Our real business operations are located in Arkansas,” said Scott Yu, CEO and President of United BitEngine, a Delaware leasehold. “We have the project up and running already, we have the project up and running in Newport,” and it is expected to be operational in the fourth quarter. He declined to reveal the location of the Conway County Center, but the Morelton Planning and Planning Commission approved a site plan in May for a project near the Energy Arkansas power substation west of downtown. Mayor Allen Lipsmayer described it to KVOM-FM as a million dollar investment.

Entergy, the state’s largest energy company with more than 700,000 customers, will be the power supplier for all Newport projects, the United BitEngine site in Morrilton and all three Juice Tech centers.

“The key factors to our work were cheap and stable electricity supplies, relatively cheap land near a substation and enough space to develop a site to host our containers,” said Yu, a former corporate attorney who lives in New Jersey. “You can’t get very close to residential areas, because there’s some noise from the cooling fans, but there’s really no pollution other than the noise.”

order process

Creating a bitcoin fortune (see sidebar below) requires enough electricity to power thousands of homes. Thousands of mining computers the size of old VCRs gobble up power, connected in nodes and either docked in warehouse space or placed in modified networked shipping containers on rigs at a grid-connected mining hub.

Concern about fan noise helped drown out California real estate developer Joe Delmendo’s plans to transform the old Pine Bluff commercial building at 300 Beech St. to a bitcoin miner. Delmendo Commonwealth Real Estate of El Segundo bought the old newspaper building and armory, equipped with a dedicated one-megawatt line that once operated the printing press, at an auction last November for $619,000. The city planning commission rejected his proposal after hearing complaints about potential noise, property value damage and excessive energy use. One megawatt of electricity is enough to power about 800 homes, and GMI officials have estimated that their Newport project will consume 15 megawatts — the equivalent of 12,000 homes.

Delmendo told the Pine Bluff trade newspaper last month that he might sue the city; The mayor’s office told Arkansas Business that the Commonwealth will be able to reapply for a zoning permit after 12 months as long as the new proposal is changed significantly.

The three companies that build in Newport, Walnut Ridge and Little Rock, all of which are owned by Asia, do not mine bitcoin on their own; They sell their powerful data processing services to crypto mining clients. Services have been on the rise in the United States since mainland China has essentially banned cryptocurrency mining, ostensibly for excessive electricity use and environmental damage, objections the industry faces worldwide.

Despite the power and computing requirements, bitcoin generation can pay off well. One bitcoin, which has no physical reality, traded more than $20,000 last week, albeit well below its high of $64,400 in November. States as diverse as New York, North Carolina, and Utah are competing for projects.

Job Outlook

Bitcoin hubs are generally not a big employer, and another issue that critics cite to counter the economic arguments for cryptocurrency mining. But every site requires security, guarding, maintenance and some technical services. Yu said there are four workers at the two-acre United BitEngine site in Morrilton, who are being hired through a contractor, but plans call for hiring local technical workers once they are trained. Industry experts said the centers could eventually have eight to more than a dozen local workers.

John Chadwell, executive director of the Newport Economic Development Commission, said the three Newport operations are expected to employ 45 people with average wages between $50,000 and $70,000. He works with the Arkansas Center for Data Science and Arkansas State University-Newport to provide job training.

Juice Tech purchased this building at 3300 S. Woodrow St. in Little Rock and plan to turn it into a bitcoin mining hub. It is planning other centers in Newport and Walnut Ridge.

“Arkansas was the place for us,” said Yu, whose subsidiary United BitEngine has secured a 10-acre site in Newport. “Entergy can provide a stable flow of energy, the land is relatively cheap, and the entire political environment is friendly to us.”

Entergy Arkansas, the state’s largest electric utility and an important force in economic development, will operate bitcoin operations in Morrilton, Newport, Walnut Ridge and Little Rock. The investor-owned facility wants to attract energy-intensive industries while remaining sensitive to critics’ concerns. The Arkansas Public Service Commission is reviewing a proposed entry rate schedule for crypto companies.

“Entergy Arkansas has teams working with potential clients who need specialized services to help find solutions to their business needs,” the company said in a statement. “These efforts have recently included working with several crypto-mining companies that have been attracted to lower rates.” As new industries such as cryptocurrency mining become prevalent, utilities are “working hard to manage these kinds of energy needs and costs” while keeping the entire system safe, reliable and economical.

GMI Computing, led by Frederick Huang and Alex Yeh, is looking to start operations in Newport in a few weeks. The company is a US arm of GMI Technology Inc. in Taipei, Taiwan. Huang Weihe spoke at length about the company’s plans but declined to mention them directly in this article. Operation Newport will be the first of many the company’s nationwide plans.

Chadwell, President of NEDC, has chosen Chris Murphy of Entergy’s business development team as the main driver in the cryptocurrency. “Our partnership with Entergy is vital as we work with new industries in emerging sectors such as crypto technology,” Chadwell said. “Entergy and NEDC are working to manage this growing business for the maximum benefit of the local community.”

two approaches

While GMI and United BitEngine will use containers for their crypto-hosting services on rigs built for their Newport hubs, Juice Tech is building buildings in Newport and Walnut Ridge and placing shelves and a cooling wall on the Little Rock property at 3300 S Woodrow St. Juice Tech has paid $675,000 in May for 61.429-SF a 10.5-acre lot on the edge of the woods west of Barton Coliseum.

James Babb of Malvern, a former Russellville financial planner who represents Juice Tech in Arkansas, said Mitchell Constructors LLC in Hot Springs, led by Rick Williams, is working on all three projects. “The company has learned from conducting container and warehouse operations in Texas that using an in-building rack system is best for hot and humid locations,” said Pap, a former Ouachita Baptist University basketball player.

“Two substations have been shown with sufficient capacity, plus the power rates in Arkansas are really competitive. The business model in Little Rock is a little different, because we are redesigning an existing building. In Newport and Walnut Ridge, we are building from the ground up.” Bab estimates the costs of constructing the new metal buildings at about $2 million each. “But the main capital expenditures are for crypto-mining machines,” he said, without providing any cost estimates. Professional cryptocurrency mining modules with integrated circuits of the application can sell from $10,000 to $20,000, according to online quotes.

Solve puzzles to win at a cost to the environment

Pressed to select bitcoin mining for idiots, Professor Eswar Prasad of Cornell University said the key is to keep thousands of specialized computers running and cool enough to maintain efficiency. This in turn requires megawatts of electrical power.

said Prasad, senior fellow at the Brookings Institution and author of “The Future of Money.” The race to solve complex numerical problems is verifying transactions and creating new bitcoins, with miners keeping a fraction of each.

prasad walls

“Solving these mysteries is of no further benefit to humanity,” Prasad said, “but with bitcoins trading at $20,000 apiece, there is a strong economic incentive to allocate large batches of computers for this purpose.” Bitcoin users set up encrypted digital wallets, and ledger technology distributed via the blockchain provides transparency in every transaction.

“Bitcoin is actually very transparent in most respects,” Prasad said. All transactions, “including timestamps, amounts, and digital identities of transacting parties are recorded in public digital ledgers that anyone with an internet connection can easily access.” Only the names of the people behind the account numbers are confidential.

Cryptocurrency mining hubs feature modified storage or shipping containers filled with hundreds or thousands of networked VCR-sized mining computers that cost between $10,000 and $20,000 a piece. A United BitEngine center opened in June in Morrilton, and another is set for Newport. “We will have several thousand machines at each of our locations,” said James Babb, a representative for Juice Tech, a Texas company that plans to mine bitcoin in Newport, Walnut Ridge and Little Rock.

“The bitcoin mining industry claims that it will provide jobs for countries and help them become innovative financial centers, but the employment benefits are minimal,” Prasad said. “By some estimates, 1% of the world’s electricity is now devoted to cryptocurrency mining.” He described the endeavor as a “misleading and environmentally destructive race to the bottom”.

But Frederick Huang and Alex Yeh of GMI Computing, which is planning a project in Newport, say their company is dedicated to environmental awareness, and Entergy Arkansas has ensured that 70% of its energy will come from non-emission nuclear sources. GMI is also looking at ways to power its machines with electricity generated “behind the counter” by wind farms or solar projects.

Bitcoin centers also operate under agreements to close any time the local network is seriously overloaded. For example, bitcoin miners in Texas shut down in the deadly winter of February 2021, relieving pressure at the time of a catastrophic power outage.

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