Basin Electric watches cryptocurrency volatility and risk


In late January, North Dakota Gov. Doug Burgum announced the construction of a large data center near Williston. Burgum, left, is pictured with Rick Tabish and Kevin Washington at the Mountrail-Williams Electric Cooperative headquarters. Tabish leads FX Solutions and Washington leads Atlas Power. The companies are partnering to build the $1.9 billion facility. Photo from the North Dakota Governor’s Office.

May 22, or “Bitcoin Pizza Day,” commemorates the day the first commercial cryptocurrency transaction was conducted by a man who purchased two pizzas for 10,000 Bitcoin. In 2010 when the purchase occurred, the pizzas cost the Bitcoin equivalent of about $30. That same amount of cryptocurrency would now be worth hundreds of millions of dollars.

Cryptocurrency is a digital form of currency that doesn’t come from central authorities such as governments or banks. Bitcoin, the first form of cryptocurrency, was introduced in 2009 and today it is just one (and the most popular) of about 18,000 types.

Jay Lundstrom, Basin Electric lead load forecast analyst, says “mining” for cryptocurrency is like a modern day gold rush. Just as hundreds of thousands of people flocked to California during the gold rush in the mid-1800s, individuals and companies are jumping on the bandwagon to mine for cryptocurrency. While they don’t use the picks, sluice boxes, and pans the gold miners used in the 19th century, the process is still risky, but in a different way.

The amount of computational power crypto mining requires makes the process extremely energy intensive. Not only are the server farms expensive, but so is the amount of energy it takes to power them.

The value of cryptocurrency fluctuates a great deal. Most major cryptocurrencies are down approximately 30-40% from late May values and are at or near 52-week lows. The reasons for the decline include recession risks, inflation rates, climbing interest rates, and other, more secure and stable investments, have fallen as well.

Because of this, miners need to ensure the reward is greater than the costs they are incurring. “The process is a rollercoaster,” Lundstrom says. “It’s like the stock market; you try to buy low and sell high.”

To learn more about cryptocurrency, its building blocks, crypto mining, and why companies want to construct data centers in Basin Electric's service area, read Cryptocurrency - the modern day gold rush in the Spring 2022 issue of Basin Today.

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