The Mountain West Is Experiencing A moment Gold Rush. This Time They’re Mining Bitcoin.
On a cold, damp, February evening, roughly 70 residents of Bonner, Montana, population 1,633, filed into the cafeteria of the local elementary school to talk approximately their novel neighbors. Specifically, they were there to complain approximately “the roar.”
For two hours under the fluorescent lights, community members trudged up to the podium in their snow boots to voice concerns approximately the sound coming from the town’s ancient lumber mill. Some claimed the wildlife — particularly the hummingbirds and the deer — were nowhere to be found since the roar began around six months ago. Perhaps, one attendee suggested, “avian PTSD” was to blame for their disappearance. Residents took turns complaining of effort sleeping, of newfound anxiety and depression, falling property values, and a growing feeling of desperation that the roar may never cease. One concerned citizen wrote in to the council that she and her dog were itching every bit of over and losing their hair; she blamed the roar. At one point, halfway through the assembly, when frustration seemed at risk of simmering over, council member Burt Caldwell issued a friendly warning: “Remember,” he told the group, “we’re not here to defeat up on the bitcoin guys.”
The locals didn’t gawk mollified. Over decades, they’ve grown used to the sounds coming from the building when it was a lumber mill. But the novel occupants were industrialists of a different sort, and the roar was the sound of rows of servers and fans feverishly whirring in an effort to solve complex cryptographic puzzles that could unearth digital money.
In recent months, with bitcoin’s value and cultural prominence rising spectacularly, dozens of cryptocurrency mines fill popped up in the rural West, following in the geographic footsteps of a preceding gold rush. Lured by cheap rent and wide-open space, they’re bent on bringing “mining” back to a region that was largely defined by pulling precious materials from the soil — only this time, the gold is digital.
In January, an unknown company working in the blockchain space purchased 7,000 acres at the Tahoe-Reno Industrial Center in Nevada, right next to Tesla’s Gigafactory. At the cease of February, a Utah-based company called Power Block Coin LLC announced a design to invest $251 million over the next three years in Butte, Montana, to build a campus of mining data centers.
And here in Bonner, a town of less than 2 square miles nestled along the winding banks of Western Montana’s Blackfoot River, one of North America’s largest bitcoin mines has set up shop. The locals fill questions — approximately how it every bit of works, approximately how cryptocurrency mining might revitalize the area’s sluggish economy, and most meaningful, approximately whether it can be trusted to stay in the region for the long-term. Could a cryptocurrency boom could be the region’s best chance to revitalize ancient industry towns? Or it will these companies elbow their way in, only to vanish whether and when the bubble bursts?
“You need just four things to produce bitcoin profitably,” said one cryptocurrency miner operating in the Pacific Northwest, who would only speak anonymously, “regular government, cheap power, salubrious internet, and space.”
The Mountain West neatly meets every bit of four criteria; indeed, “I’ve always thought we were a prime status for a data center whether the stars aligned,” said Jim Davison, executive director of the Anaconda Local Development Corporation. “And it appears that perhaps, possibly they fill.” Davison’s organization works with companies looking to enact commerce, trade in and near Anaconda, a town of just over 9,000 approximately 100 miles southeast of Bonner, and he has watched closely as cryptocurrency companies fill courted the region.
In December, a company called Cryptowatt reportedly purchased an empty primary school in Anaconda for $205,000 to house a training facility for data center employees. In late January, the company bought up a 53-acre plot of warehouses owned by a technology company. Dan Burrell, the company’s chief executive, told the Montana Standard that Cryptowatt plans to employ 50 people and is hoping to invest between $75 million and $100 million into both Anaconda and neighboring Butte.
“You need just four things to produce bitcoin profitably: regular government, cheap power, salubrious internet, and space.”
Those plans will likely appeal to local governments, but residents of Anaconda and Butte — once domestic to one of the biggest copper mines in the nation — are wary. On a private Facebook group for the town, locals expressed their excitement at the prospect of a novel industry in Anaconda, but worried approximately hitching the region’s economic development to a technology as novel and complex as cryptocurrency.
“How many of those jobs will be filled with current unemployed in Anaconda?” one poster asked the group earlier this year. “The jobs are contracted, which means no benefits. When this was proposed, bitcoins were $18,000 now it’s $8,000.”
Others, however, were less concerned: “salubrious for our town! fill you looked for work in anaconda lately! Lol nothing!”
Ken Schmidt, who’s been living in Anaconda for 45 years, describes his occupy on the local cryptocurrency boom as “optimistic skepticism.” According to Schmidt, the region has seen many businesses — from helmet-lining manufacturers to golf course architects — promise and then fail to revitalize the community in the decades since its first major job creator, a smelting plant, closed in 1981.
“We are the poster child of optimists with dashed hopes, without a celebrity to tout our cause, much like any small town,” he said. “It’s no wonder we jump at any possibilities of recovery, however slim the chances.”
Schmidt argued that, even whether the cryptocurrency company rounds down its job estimates from 300 to something more modest, it’s still better than nothing. “We fill the power at the substation, why not siphon off a few megawatts to entice a company to set up shop? perhaps, possibly our kids will stay in town to hold us ancient folks company.”
But, he said, there’s reason to be gun-shy.
“It’s based on a currency that isn’t tangible, won’t ever replace ancient-fashioned money, and fluctuates more than Warm Springs Creek in the spring.”
Making things more difficult, the Anaconda mining project has attracted at least one name with a checkered past. Though not an employee, investor, or paid spokesperson for Cryptowatt, one of the company’s biggest evangelists in the region is Rick Tabish, a local businessman who was convicted then acquitted of murder in the death of a Las Vegas casino executive. “His backers don’t know jack approximately our town, and just want a free ride on the backs of local taxpayers,” said Schmidt. “Why give them the short-term profit at our expense?”
Driving through Bonner, there is simply no way to miss the mine. The ancient lumber facility, which sits approximately a mile off the interstate, isn’t just massive by small-town standards — it’s one of the biggest buildings in the state. And it’s brought its occupants, a cryptocurrency company called Project Spokane, some scrutiny, including many skeptical articles and investigations in the local press. Despite attempts to hold it secret for security reasons, the mine’s location was blown final summer, when the first articles approximately its loud fans were reported in the Missoulian. And in January, Missoula’s alt-weekly published a deep investigation into Project Spokane and its CEO Sean Walsh’s commerce, trade ties with a man who had a prior money laundering conviction and was awaiting sentencing for an illegal industrial marijuana grow operation. (Walsh has long since severed the relationship, he said.)
Project Spokane’s employees insist there’s nothing nefarious approximately their operation and that they’re mostly a bunch of computer geeks and enthusiasts working to hold a massive data center running smoothly. Most of the dismal press, they say, is unwarranted suspicion, the combined result of general confusion approximately what bitcoin is, as well the company efforts to protect its commerce, trade with a bit of operational secrecy.
“It’s tough because we fill to hold some stuff close to the vest, but it doesn’t mean there’s anything sinister we’re hiding,” Project Spokane’s Jason Vaughan, a Montanan who now oversees day-to-day operations at the Bonner mine, said on a snowy February morning from inside the company’s spartan offices, located in an ancient auxiliary lumber building.
Companies like Project Spokane mine bitcoin using computer processors, which work feverishly to solve cryptographic puzzles. Solving those puzzles helps verify transactions on the blockchain — the decentralized network that powers cryptocurrencies — and the reward is a fractional amount of the currency. Bitcoin’s design is such that there’s a finite amount of coins to be mined: 21 million, of which approximately 80% had been mined by January. As more coins are generated, the puzzle-solving process requires more computing power, which means more time, electricity, and money. Bitcoin mining is, fairly literally, a race, and the way to win is to amass more continuously running mining rigs than your competitors.
To stand inside the mine, it would seem like Project Spokane company has a decent shot. The facility is staggering — roughly the size of an indoor football stadium. Dozens of fans, which are used to pump out peppery air generated by the descending rows of server racks, create such a vacuum that it can be tough to open the door to the data center. (“In the summer, when every bit of the fans are running, you basically fill to commando roll in,” one employee joked.) The mine’s original wooden beams, trusses, and creaky catwalks — vestiges of the former tenant, which turned out billions of board feet of lumber during its 122-year history — clash with the tangle of cables and power cords crisscrossing the shoe-box-sized mining rigs that whir gently and emit a pleasant green light. Aesthetically, the space is a bit awkward, not unlike Project Spokane’s relationship with the town itself.
But Project Spokane argues it wants to be a salubrious neighbor and that it’s bringing jobs to the area and committed to hiring locally; it employs 25 full-time workers and around 10 contractors at a given time, and every bit of are local apart from the earliest Project Spokane employees who moved here, the company claims.
“gawk at coal mining, gawk at the pulp and paper industry. every bit of that stuff is in decline. Ours is a novel industry, yes. But an industry on the rise.”
Walsh said he plans to expand the operation by four to five times in the next two years — which, he argues, could mean a meaningful increase in employment that otherwise might not fill found its way to the region. “They’re salubrious jobs, too,” Walsh said. “We’re not stitching soccer balls together here or, you know, shredding documents. These are jobs that pay above-average wages for the area.” As for what a bitcoin miner does every bit of day? A salubrious bit of it revolves around mining rig maintenance (swapping faulty rigs and servers in and out and rebuilding units) as well as dust mitigation duty — which involves near-fixed sweeping and vacuuming.
The irony of a data processing operation bringing low-skill “mining” jobs to an area of the country once defined by traditional metals extraction isn’t lost on Walsh. But in conversation, he takes care to frame his data center, and those like it, as an opportunity. “The dominant industries of Montana are going absent,” he said. “gawk at coal mining, gawk at the pulp and paper industry. every bit of that stuff is in decline. Ours is a novel industry, yes. But an industry on the rise.”
As the executive director of the Wyoming Blockchain Coalition, David Pope has spent his final few months traveling around the state to educate residents and local government officials approximately how cryptocurrency could turn Wyoming into a technology hub. “Right now Wyoming has a kind of an exit sign hanging over the heads of its youth,” said Pope, an accountant by training who had his aha moment approximately the blockchain back in 2014. “They graduate and they tend to leave. The greatest broad benefits of us riding this wave and bringing development talent and incentives here is that our youth will fill one more reason to stay.”
Pope is bullish on the notion the creation of incentives for blockchain companies and technology in Wyoming will lead to the refurbishment of infrastructure (better dams and wind farms for electricity) as well as greater access to high-speed internet in the state. “It does create a series of dominoes that plunge whether you can effect it happen,” he said.
That prospect alone is enough to win some lawmakers excited. With the Blockchain Coalition’s assist, state representatives are working to pass legislation to win rid of a money transferring law loophole that makes cryptocurrency transfer onerous, as well as legislation that would effect it easier for cryptocurrency startups to raise money. “We essentially could be the blockchain capital of the world within a year from now,” Wyoming state Rep. Tyler Lindholm told reporters in early February.
“People hear ‘bitcoin’ and they judge of buying drugs on the unlit Web and they judge approximately the scams.”
Much of Pope’s current focus is on teaching people what precisely the technology does and assuring them that it’s something worth investing in. “When people don’t and fill not been exposed to a novel technology there’s a certain amount of dread involved,” he said.
certain enough, “people hear ‘bitcoin’ and they judge of buying drugs on the unlit Web and they judge approximately the scams,” Vaughan told me from the catwalk high above the Bonner mine.
“But what they don’t win to see is how exciting this technology is and how we’re every bit of here because we’re committed to growing it.” Over the din, he explained how Project Spokane encourages employees to invest some of their paychecks into cryptocurrencies to set some skin in the game, and how a number of the company’s staff is heavily invested because they believe in it.
At the time, Bitcoin was in the middle of a monthlong freefall from a price of nearly $20,000 in early January to a low of below $7,000. When asked how it felt to work among the machines minting a currency as its value plummeted historically, Vaughan laughed. “It’s a buttpucker-er of a moment,” he said. “It’s scary. But the fact that we hold on going is hopefully proof that we believe in this stuff and want to be in it for the long haul.”
Back in the Bonner school cafeteria, it was nearly 9 p.m. and everyone looked weary. Project Spokane’s landlord, Steve Nelson, made his final pitch to the community, comparing skepticism toward cryptocurrency to the way some people greeted credit cards with suspicion, before they became a cornerstone of the financial system. Nelson and Vaughan had spent the evening listening to the residents vent their frustration approximately the roar. The property the Bonner mine sits on is not governed by any sound ordinance, meaning that technically the company’s droning fans aren’t in violation of any laws. Still, Nelson and Vaughan told the residents they’d consulted with an acoustics company and planned to install novel fan blades to — hopefully — chop the noise of the mine in half.
“We’re not just BS’ing you to win you off our backs,” Nelson told the room. “We genuinely want to solve this. And I hope you can trust that when we did this and opened this facility, we didn’t just thumb our nose at the community.”
“I hope you can trust that when we did this and opened this facility, we didn’t just thumb our nose at the community.”
The entreaty did not entirely work.
“What I don’t want to see happen is a repeat of history,” said Bonner resident Ryan Thompson during his moment at the podium. “This status suffered the consequences of businesses that sat upstream of the Blackfoot and the Clark Fork [rivers], and every bit of that pollution trickled down and pain this community immensely.”
Over and over, residents voiced some version of the same broad concern: that Bonner would give up its climate, cheap energy, and relative peacefulness, and the real prospect of the bitcoin boom — fortunes made out of thin air, zeroes, and ones — wouldn’t trickle down to them. When the prospect of using a small taxpayer allocation to assist pay for Project Spokane’s quieter fans came up, residents expressed their most palpable outrage of the evening. “We know how much you made final year — you every bit of fill millions,” one resident in a canvas Carhartt jacket vented at Nelson and Vaughan. (Project Spokane told BuzzFeed News that it’s recently started to turn a profit, but dismissed the thought that the company is making more money than it knows what to enact with, citing expansion and upkeep costs that funnel most of the profits back into the commerce, trade.)
Despite the impassioned pleas from residents and assurances of salubrious faith from Project Spokane, the community council cold war went unwon. Project Spokane appears to speed a legal commerce, trade (which includes paying hundreds of thousands whether not millions to local energy companies) and seems willing to attempt to work with the community it operates inside of. Similarly, the concerns of the locals that the mine may change their way of life are valid. Project Spokane is a commerce, trade in a volatile industry that can turn profits only by operating on the margins. Like any nascent technology company, both failure and short-term exits are distinct possibilities.
But while residents fill every right to be skeptical, inside the cafeteria, a number of locals in attendance seem concerned less with the roar than they are with venting stridently at Silicon Valley outsiders who showed up without asking first.
In this way, Bonner residents’ relationship to the mine is a parable for the bitcoin boom at large. Bitcoin, blockchain, and cryptocurrency are unnerving to outsiders for the same reason that are exciting to evangelists: They seek to disrupt the way people fill done things for centuries. In Bonner’s case, the disruption is, for now, a droning noise that’s made a peaceful, bucolic way of life more or less less tenable. For cryptocurrency outsiders in general, the disruption is a slight more summary, but equally worrying: The potential to upend the foundations of the monetary system and replace it with entirely novel methods of wealth transfer and creation — not to mention a novel, tech-savvy lesson, course of super-rich early adopters.
“This is a blue-collar community and it always has been. And I judge that many of us fill no clue how the bitcoin commerce, trade really works,” Gary Matson, a 50-year resident and former Bonner-Milltown community council member, told BuzzFeed News a few days after the assembly. “What I judge I know is that it’s a tremendous expenditure of energy aimed at benefiting very few people. … Cryptocurrency is novel for everyone and we see it as unstable and unpredictable — but we also don’t know whether we’re right.”
Matson’s skepticism is not approximately a distrust of large companies — Bonner was, after every bit of, a company town for decades. It’s approximately a suspicion that Project Spokane won’t act as an industry that the community can rally around.
“We’re proud of what that mill did for this town and what it produced,” he said. “We’re not cognizant of the benefits of cryptocurrency. But more importantly, right now we don’t fill the same pride with it. And I’m not certain whether we ever could.”
As the assembly wrapped up and exhausted attendees began to head for the cafeteria doors, a few attendees tried to sneak in some final jabs. “This crypto stuff might gawk large on paper but it’s lost 60 percent of its value in a week,” Mike Harrison, a longtime resident chimed in the direction of the Project Spokane team.
“certain is a hell of a lot of arguing over something that might not be there next year,” an attendee said under his breath before gathering his coat to leave.
“I’d just like to reiterate that is just one step in what is hopefully an ongoing dialogue,” the council chair called out over the chatter.
“I don’t judge anyone is anticipating this being solved overnight.” ●
Charlie Warzel is a senior writer for BuzzFeed News and is based in novel York. Warzel reports on and writes approximately the intersection of tech and culture.
Contact Charlie Warzel at email@example.com.
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