Grundy County votes down rezoning for new cryptocurrency mining site

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J.P. Baric, founder and CEO of the MiningStore, gives a handout on energy consumption to the Grundy County Board of Supervisors on Monday in Grundy Center. Baric opened a bitcoin mining site in the county in 2019 and is planning for a second location. (Erin Jordan/The Gazette)

GRUNDY CENTER — The Grundy County Board of Supervisors voted 4-1 Monday not to rezone land to allow for the development of a cryptocurrency mining site — the second in the county — but members told the developer the board might support a different location.

Barb Smith, a supervisor for 18 years and a developer herself, said she isn’t opposed to growth, but wants to know who is behind the projects she backs and to make sure they don’t infringe on other community development efforts.

“Speaking for myself, which is all I can do, my main reason for turning this down was because of the location you have chosen and its proximity to Wolf Creek Park,” Smith said during the meeting at the Grundy County Courthouse. “That’s not to say I or any of the other of us would vote something down that was in, in our eyes, a more appropriate location.”

J.P. Baric, president and CEO of the MiningStore, which opened one of the state’s first cryptocurrency mining sites 8 miles south of Grundy Center in 2019, spoke to the board about the global benefits of bitcoin and the local benefits of his business, which employs nine people and brings visitors who stay at local hotels and eat at local restaurants.

But without approval of a future site, “those people will no longer be coming to Grundy Center but instead will be going to other places,” he said.

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First site in Iowa

Bitcoin was created in 2009 as a way for people to send money directly to each other without a bank or third party. Other cryptocurrencies, such as ethereum and Litecoin, have followed.

Bitcoin transactions are verified and monitored by independent computers running a secure algorithm to solve blocks of numbers that represent groupings of transactions. These computers, or “miners,” race to solve each block with the payout being the next block of bitcoins, which is worth hundreds of thousands of dollars.

Magnus Anderson, site manager for the MiningStore, displays components for the company’s mining machines April 19 at the MiningStore’s bitcoin mining facility in Grundy Center, Iowa. (Geoff Stellfox/The Gazette)

Baric, 24, of North Carolina, and his family borrowed on their family business and home to raise $1 million to start a farm of computer servers, most housed in a white Quonset hut in the middle of Iowa cornfields.

He came to Iowa after meeting Jim O’Regan, of Hudson, who is the principal officer for Heartland State Economic Development Group, a not-for-profit organization started in 2014 and that had assets of $71,500 in 2020, according to Guidestar.org.

“Jim convinced me Iowa was the right spot,” Baric said of meeting O’Regan at a crypto convention in Denver.

Energy use

O’Regan helped find the right spot for the MiningStore — right next to an electrical substation owned by Corn Belt Power Cooperative.

Heartland bought the land and has a deal with the Grundy County Rural Electric Cooperative, one of nine rural electric cooperatives and one municipal cooperative that own Corn Belt, O’Regan said at the meeting.

Grundy County REC has some of the cheapest industrial electricity in the state at 4.05 cents per kilowatt-hour, according to filings with the Iowa Utilities Board.

The MiningStore site uses 6 megawatts of power during operation, which is 24/7 unless part of the system is undergoing repairs. This amounts to about 54 million kilowatt-hours a year — equivalent to the energy used by about 4,900 houses.

Many environmental groups have questioned whether the benefit of cryptocurrency is worth its energy appetite.

This hangar is the hub of a Grundy County Bitcoin mining operation owned by the MiningStore in central Iowa. (Bailey Cichon/The Gazette)

But Baric said the MiningStore site can actually help the local power grid because it has an agreement with Grundy County REC to power down during peak usage times — such as 5 p.m. on a hot summer day. Because the utility doesn’t have to buy more expensive energy at peak times, it lowers the costs for all customers, he said.

Educating Iowans

Baric admitted he hadn’t done a very good job talking with Iowans about the crypto mining site. Supervisor Mark Schildroth asked Baric why they had started work at the second site before the vote on rezoning.

“We were under the impression the site was good to go when the landowner signed a lease with us,” Baric said.

Smith and two other supervisors said that location was too close to the Wolf Creek Recreation Area, a 93-acre camping, hiking and hunting area. The board recently decided to invest COVID-relief money into enhancing the park, Smith said after the meeting.

“Once they get the rezone, they can do whatever they want, and it could be objectionable to the campers,” she said.

O’Regan said a new site they have in mind would be twice as far from the park and would have a hill and trees in between. It’s unclear when that proposal would come before the Grundy County Planning and Zoning Commission.

But some Iowans already are on board with project expansion.

David Jones, a 30-something from Marshalltown, said he’s one of 1,000 people to invest in the MiningStore through social media influencer Josh Terry.

Jones, who attended Monday’s meeting, said he bought his first bitcoin in 2020 and believes the cryptocurrency will grow in value.

“It’s three times what it was then, but less than half what it was at the top,” he said. “We’ll see what happens in the future.”

J.P. Baric, founder and CEO of the MiningStore, is photographed after a Grundy County Board of Supervisors meeting May 9, 2022. (Erin Jordan/The Gazette)

Comments: (319) 339-3157; erin.jordan@thegazette.com