Crypto proposal rejected in Brainerd – Brainerd Dispatch

BRAINERD — It’s back to the drawing board for a cryptocurrency mining facility that wants to come to Brainerd.

The words “devil’s spawn” were used Monday, July 2, to describe the practice, which council members believe is inconsistent with the city’s comprehensive plan. Not even a 12-foot-tall concrete wall could entice public officials. They voted unanimously to deny an interim use permit that would have allowed the facility to operate in the industrial park.

“For me, when I know better, I do better,” council member Kara Terry said Monday. “At the time this was originally proposed, it may have made sense, and there was limited information regarding the impacts. Now we understand more of the impact and how this additional storage does not fit into what I see as the proper direction for the city of Brainerd.”

The permit application came from VCV Digital Infrastructure, requesting approval for outdoor storage as a principal use on the property at 1918 Thiesse Drive. The company proposed constructing 26 storage containers, 40 feet in length, to house data machines and cooling towers for the operation. Council members granted a permit to the business in 2022 for 12, 20-foot-long containers and 12 cooling fans, but that permit expired, as VCV did not make any improvements to the land within a year of issuance.

When the new permit came before officials, the Planning Commission voted 3-2 to recommend denial of the permit after hearing from several residents who live near the industrial park and were concerned about the noise impacts of the facility. City Council members ordered a noise study to determine how nearby residents could potentially be affected. Staff’s study, based on projected decibel levels and information from the Minnesota Pollution Control Agency, showed the anticipated noise was within MPCA standards.

“However,” the staff report states, “there are many other factors that are not accounted for in this study that could increase or lower the decibel readings such as vegetation, above or below average temperatures, humidity, air pressure, topography, and proximity of containers.”

Staff members recommended approval of the permit Monday night, as Community Development Director James Kramvik told the council the permit was solely for outdoor storage as a primary use, which is a permitted use in that zoning district. The permit was not specifically for a cryptocurrency mining facility, even though that is the intent of the applicant.

Staff’s recommended approval came with several conditions on the permit that would:

• Set an expiration date at one year after the crypto mining operations begin.
• Require the developer to submit a hazardous waste plan for the disposal of the oil used in the immersion mining process.
• Terminate the permit upon the discontinuation of crypto mining at the property.
• Allow only immersion mining at the site. Immersion mining is a method of cryptocurrency mining in which the data machines are submerged in oil. This technique is quieter than open air mining, with the only noise coming from cooling fans.
• Require noise levels not to exceed standards set by the MPCA.
• Require the property owner to conduct a sound study once the facility is operational.

Council member Mike O’Day proposed one additional condition: A wall.

A 12-foot-high concrete wall around the entire property, he said, is the only way he would vote in favor of the permit.

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Council member Jeff Czeczok said he liked that idea in theory but would rather see the condition be less specific and reference a soundproofing wall of some sort, not knowing whether concrete was the best material for the job.

Council President Kelly Bevans and council member Gabe Johnson agreed with that sentiment.

Kramvik said additional soundproofing could be a condition, though City Attorney Joe Langel was not on board.

A wall of that size around the entire parcel, Langel said, would need a council-approved variance under city code. He questioned why the council would create a mandatory condition that would typically require a variance.

“Any kind of condition you put on this needs to really emanate from your code to have some basis for it,” Langel said. “… I’m not aware of anything in the code that requires massive, 10-12-foot sound walls.”

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Langel said he was not advocating either way on the issue but wanted to make sure the council was careful about any conditions set forth.

O’Day’s motion to approve the permit with the 12-foot concrete wall failed 2-5, with only him and council member Tiffany Stenglein in favor.

Stenglein then put forth another motion, to approve the permit with the conditions set forth by staff but changing the permit’s expiration date to Dec. 31, 2025. Her motion did not include any soundproofing measures, and it died for lack of a second.

Johnson then took a stab at a motion, proposing approval of the permit with all of staff’s conditions and the requirement of a sound-deadening barrier approved by staff.

Czeczok said he would support the motion, despite being against crypto mining in general.

“I do not like crypto mining at all. I think it’s the devil’s spawn. I think this whole thing is a mess,” he said. “I will support the motion because we have a job to do as council members. I do not want to see the city suffer for the sake of protecting something that is completely unknown at this time.”The permit, he added, would come with several conditions to mitigate any potential problems.

“As much as I would like to see this go away and never come back again, we have to be responsible to our taxpayers, our citizens and our neighbors,” Czeczok said.

The third motion failed 3-4, with Johnson, Stunek, O’Day and Terry voting against it.

Terry made the final motion, to deny the permit based on inconsistencies with the comprehensive plan and both environmental and noise concerns from nearby residents.

Living in south Brainerd, Terry said she knows a noisy neighborhood, with UPS trucks, the recycling facility and large beverage trucks coming and going. She said she bought her house understanding those noise factors were there and noted the noises stop at night and usually on Sundays, whereas the crypto mining facility would operate 24/7. She also pointed to the city’s desire to attract job-producing businesses to Brainerd, which is not the case with crypto mining, beyond local contractors to construct the facility.

Terry’s motion to deny the permit passed unanimously.

The applicant has the option to appeal the council’s decision to a district court within 30 days.

THERESA BOURKE may be reached at

theresa.bourke@brainerddispatch.com

or 218-855-5860. Follow her on Twitter at

www.twitter.com/DispatchTheresa

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