Behind the scenes of the ill-fated Compute North cryptomining project, Greenville officials pressed to seal the deal

Pitt County economic development officials and the Greenville Utilities Commission were prepared to offer Compute North $50,000 in incentives to site an enormous cryptocurrency mining center on land owned by a Greenville Utilities Commissioner.

Details of the deal, known as “Project Coin,” are included in closed-session minutes of the Greenville Utilities Commission. Those minutes show the GUC’s optimism and the urgency in wooing Compute North to Pitt County.

The cryptomining center would have used an enormous amount of electricity, primarily from fossil fuels: 150 megawatts  compared with 5 megawatts for the typical industrial customer. 

Compute North’s energy consumption could have generated an estimated $34.4 million in annual revenue for the GUC by 2024. 

“Compute North is a very attractive customer to GUC,” read July 2021 closed-session minutes of the Greenville Utilities Commission. “The payback to GUC would be in months, not years.”

Discussions about “Project Coin” are documented in the commission’s closed-session minutes from July, October, November and December 2021. Under state public records law, closed-session minutes regarding economic development are confidential until a matter is finalized. Because the project is defunct, the GUC minutes are now public.

The Greenville Eastern North Carolina Alliance would have offered $25,000 with the other half provided by the GUC.

 “Normally [the $50,000] would be the amount of money that the State of North Carolina would contribute to an economic development effort” minutes from July 2021 read. “But there is simply not time to get this approval from the state since we need to move so quickly.”

GUC General Manager and CEO Tony Cannon told Policy Watch via email today that Compute North “did not ask for incentives so they were not offered.”

Based in Minnesota, Compute North had planned to add Pitt County to its portfolio of cryptomining centers. The company had established permanent facilities in an old World War II hangar in Big Spring, Texas, and a former Gateway computing center in Sioux City, South Dakota. The Greenville facility would have been “modular,” with the banks of high-speed computers housed in shipping containers. 

Cryptomining uses a network of high-powered computers to verify cryptocurrency — an alternative form of money, including Bitcoin or Ethereum. At its other locations, Compute North primarily hosted computers and leased bandwidth to cryptocurrency miners; bankruptcy documents showed that the company also did some cryptomining itself.

In July 2021 two crucial events involving Project Coin occurred: The GUC announced it was working with Compute North on the development of a new “digital infrastructure” site. And the city council named Ferrell Blount III to GUC, an appointment that would later be pivotal for the project.

Cannon told the GUC that Compute North’s original energy usage estimate of 30 to 100 megawatts would increase to 150 megawatts over a period of a year to 18 months. The 150-megawatt figure represented 45% of the GUC’s available power of 340 megawatts. 

GUC buys power from Duke Energy and then sells it to customers within the commission’s service area.

The company could have begun operations as early as mid-2022, the minutes read.

Compute North had originally planned to build its center near Belvoir Elementary School in greater Pitt County. But fierce community opposition – particularly about the center’s constant din of fans required to keep the computers cool – threatened to derail the proposal.

According to GUC minutes from October 2021, Phil Dixon, the attorney for the GUC, told Pitt County commissioners that if they “succumb to local political pressure to deny the request” the company could appeal to Pitt County Superior Court.  The court could force commissioners to grant the permit if there was no evidence to support the denial, Dixon advised. “Another alternative is for Compute North to seek alternative sites.”

In November 2021, Compute North withdrew its application for a special use permit shortly before the county commissioners were scheduled to vote.

GUC minutes from that time reflect the urgency about keeping the Compute North deal alive.

GUC Business Development Specialist Kathy Howard had been “working very closely” with the company and the city to find a “suitable site.” The property needed to be within Greenville’s extraterritorial jurisdiction, where the city has zoning responsibility. And ideally it should be next to one of the GUC’s electrical transformers so the cryptomining center could tap into the system. 

They found such a site: 44 acres owned by Ferrell Blount III, the newest member of the GUC, and his family. The property is on East Martin Luther King Jr Highway, next to DSM Pharmaceuticals and a GUC substation. Eleven of the acres, which is near Parker Creek, are “wet and unsuitable for development.”

At the time, neither Compute North nor the GUC would publicly identify the new site.

Blount and Compute North had agreed upon a tentative price, but had no contract, pending an environmental assessment. 

Since Blount had a “possible conflict of interest” he did not attend the closed sessions on the matter that month or in December, according to meeting minutes. However, he did not officially disclose the conflict of interest until March 7, 2022, according to GUC documents. He lists the conflicts as ” various local business interests.”

Although the project still had to clear the planning and zoning commission and Greenville City Council, “It appears that this project is back on track,” Cannon said, according to the minutes. “We may be able to still land this project after all.”

In January 2022, at a contentious Greenville City Council meeting, elected officials voted 4-2 to amend a zoning ordinance to allow Compute North to build its data center. 

“We were optimistic about this project and the potential investment in our community,” Cannon told Policy Watch by email.

By April, however, the project was on hold. At the time, the company told Policy Watch it “paused development plans “based on legislative and regulatory actions that may impact the cost of energy in North Carolina.”

Last month Compute North declared bankruptcy.

According to court filings, the company owes money to several groups and individuals in Greenville, including Blount, the City, Pitt County, the Stanton House Fire Department and the GUC. The amounts aren’t listed.

This third paragraph of this story has been corrected to say 150 megawatts instead of “150 megawatts per year.”