The Madison City Commission has approved agreements with Simple Mining LLC that clear the way for the company to develop a digital currency mining facility on city-owned property.
The Commission approved both a land lease agreement and an electric service agreement during its October 5 meeting. The agreements are connected to a proposed 10-megawatt facility that will be located near the City’s Southeast Substation along South Dakota Highway 34.
Simple Mining, which is based in Cedar Falls, Iowa, plans to lease approximately 3.75 acres of city property at 840 Southeast 10th Street.
Under the land lease, Simple Mining will pay the City $10,000 per year during the development period. Once the facility begins commercial operations, the annual operating fee will be $10,000, with the fee increasing by two percent each year. The operating term is set at 20 years, with provisions for renewal.
The electric service agreement provides for a large, continuous but interruptible electric load. The facility will operate under the City’s Large Load Electric Rate and Heartland Energy’s Interruptible Load Program.
That means the facility can be required to significantly reduce its electricity use when power is needed elsewhere on the regional grid, including during emergencies or periods of high demand. City documents say the facility’s load could be reduced to as little as four percent of its normal level.
The Large Load Electric Rate requires customers to have at least five megawatts of peak demand, maintain an 80-percent load factor and meet interruptibility requirements. Customers are also responsible for costs associated with engineering studies, interconnection, transmission or distribution upgrades and other improvements needed to serve the load.
City officials say the agreements are expected to generate additional revenue for the City’s electric fund through the sale of excess energy on the market while allowing existing customers to remain a priority for electric service.
Simple Mining will also be responsible for costs associated with providing electric service and any necessary improvements to the City’s electric system.
The proposed facility will use a closed-loop hydro-cooled system, which will not require water usage. In fact, simple mining says their facility will not connect to the city’s water or sewer system.
Simple Mining previously received a conditional use permit and variance from the Madison Board of Adjustment on September 15. The project also has conditions addressing noise, noise testing, fencing, landscaping, lighting and the height of cooling equipment.
With the land lease and electric service agreements approved, Simple Mining must still obtain a building permit from the City’s Engineering and Community Development Department before construction can begin.
