SUPERIOR — A California-based company was given the OK by the City Council to spend six months exploring the viability of turning gas into energy at the Superior landfill.
The council approved signing a letter of intent with Vespene Energy Inc. on Tuesday, April 18, that will allow the company to explore the possibility of using gasses generated at the landfill to convert into energy used for on-site data processing or cryptocurrency mining.
“It’s worth noting the city didn’t initiate that relationship,” Mayor Jim Paine said. “They reached out to us.”
While the city has explored converting methane into energy in the past, the cost of reaching infrastructure to get the energy to consumers was cost prohibitive.
Paine said the company believes they can generate a profit by using methane generated at the landfill.
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Vespene Energy, of Berkeley, California, could get around the infrastructure barrier because it plans to use custom-designed, self-sustaining microgrids to use the energy on-site to operate its data center. It would use a multi-pronged approach to capture revenue streams for the proposed project, including Bitcoin mining and data processing and landfill direct-use energy buyback and other sales.
“Our commitment is that we’re not going to go out and advertise for three other companies to do the same thing in that six-month period,” said Todd Janigo, public works director.
Councilor Tylor Elm said it makes sense that the company would want to take advantage of the energy at the landfill because crypto-mining can be an electricity-intensive process.
“Crypto-mining is how additional units of cryptocurrency come into existence,” said Benjamin Hansen, of Duluth and the Twin Cities. Hansen said mining for cryptocurrency like Bitcoin, Monero and Chia is his hobby. He also owns quantities of DogeCoin, Ethereum and Tether. He said there are a few ways mining can be done, but it depends on the cryptocurrency.
Hansen said the mining methods he is familiar with are done through proof of work, proof of stake and proof of space-time. Bitcoin is an example of proof of work, the energy-intensive method of crypto-mining, he said.
“Think of the computers with the blockchain (a globally distributed, publicly viewable record of every cryptocurrency transaction) as friends playing cards,” Hansen said. “In the case of proof of work, someone will stand up and say, ‘I'm thinking of a specific card and whichever one of you creates that card from scratch wins a Bitcoin.'"
He said while some may choose to create the card on their own, others may hire an artist to create the card faster to increase their chances of winning. In computing terms, Hansen said it can be very expensive and consume a lot of energy to win.
With proof of stake, used by Ethereum, he said someone who already owns the cryptocurrency is chosen at random to validate someone else’s transaction and earns a small fee for doing so.
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“At this time, someone who wishes to earn these fees must own at least 32 Ethereum, which is currently worth about $64,000,” Hansen said.
Chia, which Hansen is currently mining, is a good example of proof of space-time, he said.
“Using the card-playing analogy again, someone stands up, shows everyone a random card, and says, ‘Whichever one of you has that same card in your hand, or the one closest to it, wins,'" Hansen said. “What this means in real-life is that someone mining Chia has hard drives full of large files containing random numbers, and when a new number is called out by the system, their computer checks to see if it has a matching number.”
Hansen said while he enjoys setting up his mining operations, it can be expensive and is a modern-day "Wild West" situation. It can also be somewhat impractical in the real work, he said.
“Some of these cryptocurrencies have validation times much longer than a credit or debit card swipe,” Hansen said. “Can you imagine trying to get a coffee on the way to work, and you have to stick around for an hour for the transaction to clear?”
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