photo by: Zack Pistora/Sierra Club

McLouth, Kansas residents gathered to discuss proposed cryptocurrency mine development nearby.

Keith Meador and his wife were standing outside their McLouth home in December 2022, preparing to go out for the night, when they clearly heard the explosion.

“As soon as it happened, we both looked at each other and we said, ‘The tank battery just exploded,'” Meador said.

Sure enough, the group of oil tanks on a natural gas field less than a mile north of the town was throwing up a column of smoke into the sky. Meador, who was McLouth’s mayor at the time and also worked for the fire department, told the Journal-World that he rushed to the scene along with half a dozen township fire departments. It took four hours to put out the blaze, which destroyed two oil tanks, a stock truck and an operator’s vehicle that was nearby.

For many McLouth residents, that was a sign of trouble from a company’s failed attempt to build a cryptocurrency mining operation on the site — a project that would have involved massive, loud, energy-hungry computer systems running around the clock, powered by massive natural gas generators.

These types of operations — and similar large-scale projects, such as data centers and battery systems used by wind and solar farms — are becoming more and more common in rural parts of the U.S. And unincorporated Douglas County has been seeing some interest from them. The county has already received inquiries from companies interested in possibly locating energy storage facilities here, and county leaders want to figure out how these projects fit into the county’s zoning rules.

In July, the County Commission voted to initiate a text amendment to the zoning and land use regulations that would cover these battery energy storage systems, data centers and digital asset retrieval facilities. But that’s just the very start of the process. County staff has said there’s a lot of research and public outreach to be done before any specific rules can be drafted and approved.

photo by: Zack Pistora/Sierra Club

Long shot of the actual mining site in McLouth, Kansas taken from the property line.

• • •

The three major types of projects that the county’s discussion will focus on are used for very different things. But they have a few things in common, too. They’re large, they’re high-tech, and they involve a lot of energy, whether to use it or to store it.

First, there’s the type of project for which Douglas County has already been considered — battery energy storage systems. These facilities are essential if wind and solar power are to be used in place of power plants that run on fossil fuels, because the batteries enable the wind and solar power to be stored and then released when consumers need it.

The battery systems can pose dangers just like any other lithium-ion battery, such as a chemical reaction that can result in a fire or explosion.

But the other two types of uses — data centers and cryptocurrency mines — have more constant environmental impacts, which Sierra Club lobbyist Zack Pistora said are cause for concern.

Pistora said the best way to picture data centers is to imagine big warehouses full of computers — lots and lots of computers.

“Instead of books on the shelf in a library, it’s computer servers,” Pistora said.

These centers are crucial for many businesses. But they also consume a lot of resources and must operate continuously to process data efficiently. A data center typically consumes 10 to 50 times the energy of a typical commercial office building of similar size, according to the U.S. Department of Energy, and it also requires a lot of water for cooling. A team of researchers from California estimated that the AI language model ChatGPT requires roughly 500 milliliters of water for every 10 to 50 chat responses it generates.

Cryptocurrency mining operations are similar, in that they also consist of huge numbers of computers operating around the clock.

Bitcoin is the largest and most well-known cryptocurrency, and it is maintained by a decentralized network of its users. Transactions made using Bitcoin are assigned unique, random identifying codes through a network algorithm. Bitcoin miners then use powerful computer systems that operate around the clock, running an endless series of random numbers to decipher these codes and confirm the transactions made with the currency.

When a valid code is found, something that happens about once every 10 minutes, a Bitcoin miner receives newly created Bitcoins — which can be worth tens of thousands of dollars apiece — as compensation for their work, according to Inside Climate News.

The massive amounts of electricity used to process these transactions, however, are a major concern for environmental activists like Pistora and the Sierra Club.

A report published by the Sierra Club and Earthjustice, a nonprofit environmental law organization, concluded that cryptocurrency mines harm local communities by increasing pollution and impacting electricity rates and delivery.

The mining facilities contribute substantially to greenhouse gas emissions, because fossil fuels are used to generate their electricity. The report estimates Bitcoin mining in the U.S. emitted between 11 million and 76 million extra tons of carbon dioxide last year, with a central estimate of 27.4 million tons. For comparison, this is about three times the amount of CO2 emitted by the largest coal plant in the U.S. in 2021.

Just like with GPT, there’s also the water use. Take the community of North Tonawanda, N.Y., where a cryptocurrency mining operation took over a natural gas plant to power its operations. The Sierra Club and Earthjustice report said this operation consumed about 500,000 gallons of water daily for cooling, which is about 12% of the City of North Tonawanda’s total water use.

Another local harm is noise pollution. The report said some people who have lived next to these operations described the sound like living on top of Niagara Falls or 1,000 hair dryers blowing in unison.

Given these mounting concerns, Pistora said it was important to ensure that the areas where these operations locate aren’t burdened with high energy and water costs — or even forced to construct new plants to accommodate the increased electricity demand.

“That’s why it’s important for counties, the state and even the country to figure out good rules to protect the communities and to offer transparency so we know what’s happening with these cryptocurrency mines and data centers,” Pistora said. “And (additionally), bake in some environmental protections.”

• • •

Sometimes, when these large operations move in and begin operating unchecked, the public pushes back.

That’s what happened in North Tonawanda. According to the Buffalo News, its residents fought to put a stop to new cryptocurrency mining operations, and the city passed a two-year moratorium on new cryptocurrency mines or the expansion of existing ones in July.

It’s also what happened in McLouth, about 15 miles north of Douglas County.

The company that was interested in McLouth was called Crypto Colo Center Corp., and it touted the potential economic impact of its planned cryptocurrency mine. But, as Kansas Reflector reported, local residents were concerned by the development, which would use shipping containers full of computers to mine digital assets on the natural gas field north of the city.

CCC’s plan called for the mine to be powered by natural gas from the property, which would be used to generate 32.4 megawatts of power. According to the Nuclear Regulatory Commission, that amount of electricity is enough to power around 32,000 homes for a year.

But residents in McLouth were voicing concerns about the potential impact on property values; the high electricity demand; the adequacy of environmental assessments; and the effects of noise pollution on residents, wildlife, and livestock.

photo by: Zack Pistora/Sierra Club

Signs opposing the cryptocurrency mine project in McLouth, Kansas were posted all over town, both hand drawn and printed.

Kansas Reflector reported that there had already been opposition to the project before the oil tank explosion on the site in December 2022, and the mining operation in fact would never get off the ground. On Feb. 21, 2023, the Jefferson County Community Development Office issued a “stop order” to CCC’s legal counsel because the company had begun building structures at the site without a permit. The following day, the McLouth City Council advised the county planning commission to reject CCC’s request for a conditional use permit, which was necessary to obtain a construction permit.

The Jefferson County Commission also imposed a moratorium of at least one year on applications for construction of cryptocurrency processing centers.

“The company that tried to start up here was not the most straightforward company that you’d want to work with,” Meador said. “They never completely came out and told all of the truth. We had so many people in the community go out and do a lot of research, which really helped. It not only helped the county, but it helped the city to decide to fight them and push them out.”

• • •

Back in Douglas County, planner Karl Bauer mentioned what happened in McLouth during the County Commission’s business meeting on July 31. He said that was one of the reasons why Zoning and Codes was interested in further examining these land uses.

There’s also what county staff has been hearing from developers interested in high-tech projects — and what it’s been hearing from residents.

As the Journal-World reported, Bauer said the county got an inquiry in May from a company interested in bringing a battery storage facility here. And, in the opposite direction, before commissioners initiated the text amendment to the zoning and land use regulations, several Douglas County residents sent emails expressing their concerns about the environmental impacts and how much electricity it takes to power facilities like cryptocurrency mines.

The county’s process is just beginning — Bauer said in July that planning staff was not intending to write a text amendment right away. What county staff has said is that the first steps will involve a lot more research.

Douglas County Zoning and Codes Director Tonya Voigt said in an email to the Journal-World that staff would be reviewing regulations in other communities, gathering feedback from county residents and working with industry experts to figure out what sorts of regulations are needed. And Bauer said that the county wanted to specifically start a community discussion on whether these activities should be allowed as conditional uses in certain zoning districts or banned altogether.

Any new regulations will need the County Commission’s approval once they are formally proposed. And county spokesperson Karrey Britt also told the Journal-World that the decision on a moratorium for energy storage systems, data centers, and cryptocurrency mining developments would be brought to the commission and would go through a public process.

Similar work is ongoing in Jefferson County after its encounter with cryptocurrency mining. Stephan Metzger, community development director of Zoning and Codes in Jefferson County, said that his county’s moratorium will likely have to be renewed because the county is still in the process of developing a comprehensive plan and regulations.

Meador said he thinks that when it comes to cryptocurrency mines, the best thing to do is to prevent them from getting started in the first place. He said he wished the city council and county had conducted more thorough research before the situation escalated. And he hopes other communities will carefully evaluate the consequences of such developments before proceeding.

“For community leaders, you need to be doing a lot of research about what these companies are and what the environmental and economic impact can be,” Meador said. “I think doing that and letting everybody voice their opinions helped a lot.”