At the end of about five hours of testimony on Wednesday, a hearing examiner ended the discussion on allowing what could become the largest cryptographic mining operation in the country in Usk with a question: what name do I use?
Christopher Anderson, a Spokane County Hearing Examiner, who also occasionally hears cases for Pend Oreille County, hosted the virtual hearing on whether to approve a conditional use permit filed by California-based Allrise Capital Inc. to turn a former Ponderay newsprint factory into a electricity-consuming cryptocurrency mining site.
“I’m curious about a point that I admit is a little confusing in all of this,” Anderson said. “Who is the entity … to whom should this be addressed in terms of conditions, etc.?”
Spokane’s lawyer, Taudd Hume, one of the two lawyers at the hearing representing Merkle Standard, the company that will operate the cryptocurrency mining operation, did not immediately provide the name.
“I think I have an answer for you. Let me consult with my colleagues here,” Hume said as he silenced his Zoom call for several seconds. “We’ll answer your question with a question.”
Hume said the county staff report included Pend Oreille Real Estate LLC in the application, but Hume said the operation would be operated by a different company, Merkle Standard. Not to be confused with Pend Oreille Industries LLC, which was another Allrise Capital company.
While the confusion is unlikely to affect the outcome of the permit, it posed another line of questioning for opponents and even for those residents who said they would be willing to support the operation.
Susan Hobbs attended the Zoom hearing on Wednesday.
Hobbs, a former member of the Pend Oreille Planning Commission, urged the county to proceed with caution in Merkle Standard’s plans to get 600 megawatts of electricity a year, which would amount to two former Kaiser Aluminum Mead foundries operating at full capacity.
“This is the biggest fall in Pend Oreille County,” Hobbs said. “If there was ever a time to make sure no stones are left unturned, this would be it. I hope we do it before we rush.”
But Hume, Merkle Standard’s attorney, said the county only has to follow state and federal laws, especially for an area that has had “certain impacts on the neighborhood … for a long, long, long time.”
“This is a very clean, high-tech use,” he said. “All we’re doing is putting computers in boxes, putting them in the parking lot and letting them work.”
However, an appeal filed by Ed Styskel argued that the county did not consider the impacts of noise on humans and wildlife from the more than 30,000 computers and dozens of cooling towers planned for the site.
Styskel, a wildlife biologist, testified about nearby white pelicans, endangered long-eared bats and other species known to live in the area.
“The applicant did not recognize that loud noise is a major byproduct of the proposed 30,000 cryptographic mining servers and did not identify measures that would minimize or prevent complaints of public nuisance,” he said.
Hume noted that conflicts over noise are usually handled after the fact by “annoying” lawsuits.
“Noise is a very strange animal in the world of land use,” he said. “We have no case law that says you have no right not to hear anything. What we live in is a regulatory environment that says you have a right not to hear something at a certain decibel level at certain times. “
Ultimately, Hume argued that Styskel’s effort to force the council to make a more detailed environmental impact statement failed on several fronts.
When questioned, Styskel could not say how much the computers would create or whether the 900-acre site was currently home to an endangered or threatened species, Hume said.
Testing the impacts was “his job,” Hume argued. “We know that there are a lot of smart people out there who have been able to find a lot of information on the internet.
“What we don’t hear is what happens on the site,” Hume continued. “That was what they had to do and they didn’t get it.”
But it appears the Internet has helped Merkle Standard secure a “non-significant determination,” meaning county planners don’t believe the cryptocurrency mine has a significant adverse environmental impact.
County Planning Director Greg Snow stated that when company officials informed him that the computer servers would generate about 75 decibels of sound, he did not know what the equivalent noise level would be.
“I looked on the internet. What does that mean?” Said Snow. “It turned out to be a dishwasher.”
Hume also noted that the Washington Department of Ecology, which regulates noise, and Fish and Wildlife did not comment on the potential impacts on the county’s conditional use permit application.
“We know that the lack of feedback means those agencies have nothing specific to worry about,” he said.
Styskel, who also provided a witness who said the sound levels coming from the venue could be often worse than those tested by the company, said he felt the system was unfairly weighted in favor of the applicant.
Styskel also noted that he was not allowed to visit the site to measure noise or search for wildlife.
“First of all, you have to have a lawyer to file a case on impacts just for a citizen like me to comment on it,” Styskel said. “Secondly, the weight of the evidence that is being requested at the project site is totally reasonable.”
Anderson, the hearing examiner, noted that the conditional permit process received about 87 written comments, which sought to divide support for the proposal and those opposed. He said it would take him at least two weeks to issue his written decision on the conditional use permit.
Although much of the hearing focused on the impacts of noise, which Hume said the company plans to install sound dampers to help mitigate, a new problem arose during the testimony.
Resident Kathleen Werr noted that Merkle Standard did not announce that it would use “liquid-cooled” electronic products until it filed its application for a conditional use permit.
In the environmental checklist, called SEPA, the company stated “no” on the planned water extractions from the Pend Oreille River and “no” on the planned discharges.
But the conditional use permit stated that Merkle Standard would use “processed water from the Pend Oreille River and company officials in public presentations said they hoped to pour into the river as well,” he said.
“I feel like we need more information on that,” Werr said.
Ernie Hood said he worked for Hewlett Packard for 17 years. He said he was also concerned about liquid-cooled machines.
“I’m very familiar with it,” he said. “Don’t use pure water because of corrosion.”
Companies often add the same chemicals used in antifreeze to the water used to cool the machines, he said. “I haven’t heard any discussion on how to protect groundwater in that area,” Hood said.
Responding to those comments, Hume said any spill would be handled by applicable law.
Sharon Verity said she lives across the river from the old mill. She supports the cryptocurrency mine.
“When the mill was in operation, it had a very low impact on the community,” he said. “I have the same expectations for the proposed use.”
Chris Meador said he operates a small cryptocurrency mining operation and supports the Merkle Standard effort.
“People have valid doubts and questions, but they have misrepresented how the sound and the real things on the site will be produced,” he said. “I am 100% in favor of this project.”
Connie Kimble thanked all her neighbors for participating in the process to “preserve the beauty and life we have here,” she said.
However, he said there is a big difference between some machines covered by the conditional use permit and company statements stating that it wants to become one of the largest cryptocurrency mining operations in North America.
“I had no problem with the mill. And I have no problem if the noise doesn’t increase from where it is now, “Kimble said.” I have a problem with the lack of transparency in these companies.
“I think we are seeing a world of problems in the future if these problems are not addressed.”