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Brainerd EDA considers crypto mining proposals

The EDA is scheduled to meet at 7:30 a.m. Thursday, Dec. 9, to hear about the final proposals from both companies and decide whether to move forward in negotiations with either.

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Members of the Brainerd City Council's personnel and finance committee listen Monday, Dec. 6, 2021, as Brainerd Public Utilities Superintendent Scott Magnuson explains the city's power capacity in relation to proposals to build cryptocurrency mining facilities in the industrial park. Theresa Bourke / Brainerd Dispatch

Two proposals are on the table for cryptocurrency mining facilities in Brainerd.

The first is from B&D Power Solutions, a Texas-based company, which submitted a letter of intent to the city Nov. 18. The proposal is to buy two lots of land in Brainerd’s industrial park for $65,000 per acre, at a total price of $189,410 for the 2.914 acres. This facility for the cryptocurrency mining operations would require 50 megawatts of power.

The second is from Clough Properties, a local company run by Steve and Cindy Clough, of Brainerd, who own Just for Kix and The Teehive. The Cloughs’ proposal before the Brainerd Economic Development Authority during its meeting Dec. 2 came from a letter of intent dated Nov. 24, requesting two lots of land in Brainerd’s industrial park at a cost of $260,000, which works out to per acre $55,614.97 for the 4.675 acres. This proposal requested immediate access to 10 megawatts of power and another 10 megawatts before the end of 2022.

The city has the electric capacity to fulfill both proposals. When a new Brainerd Public Utilities substation was built in 2008, its capacity was based on future growth projections for the city, leading to three transformers each capable of handling 47 megawatts of power. The peak energy use for BPU’s coverage area during the year is 40 megawatts, roughly 100 megawatts less than the total capacity. That extra capacity, BPU officials said, is what makes Brainerd an enticing place to set up shop for cryptocurrency mining operations.

The proposals would require installing additional power lines to be run directly from a nearby substation.

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After the city’s EDA considered the proposals last week, the Brainerd City Council voted Monday, Dec. 6, to convey the four lots in question to the EDA to make them available for sale.

Conveying the land gives the EDA the ability to sell it and is a step the council took because the EDA has the ability to put a right of reverter on properties, meaning the land could be returned to the city if certain conditions are not met.

The land has not yet been sold, and the city has not yet begun negotiations with either company, but the council’s move gave the EDA authorization to begin negotiations with the two entities, with the understanding that property sales would be contingent on power agreements with BPU.

Another proposal

Clough Properties submitted a subsequent letter of intent with updated conditions to the city the afternoon of Dec. 1, after the agenda and packet had been assembled for the Dec. 2 EDA meeting, which took place at 7:30 a.m. that morning.

Clough Properties sent out a final updated letter of intent and proposal to the city Dec. 3.

After meeting with investors, the most recent proposal offers $500,000 for four plots of land in the industrial park and requests 60 megawatts of power for the cryptocurrency mining operation Just for Krypto and for facilities for The Teehive and Just for Kix.

Two of the lots requested, however, are the same two lots requested by B&D Power Solutions.

The updated proposal also includes an offering of $500,000 to BPU to cover the cost of getting power to the lots and a commitment of $5 million to the Brainerd Family YMCA’s capital campaign.

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The proposal promises new jobs and the use of 100% of local labor to build the new facilities.

Lastly, the proposal states that Clough Properties is committed to “substantial future investments in the city of Brainerd to be determined at a future date.” The proposal also included a commitment to creating numerous local jobs with the new development in buildings constructed with local labor.

Next steps

The EDA is scheduled to meet at 7:30 a.m. Thursday, Dec. 9, to hear about the final proposals from both companies and decide whether to move forward in negotiations with either.

THERESA BOURKE may be reached at theresa.bourke@brainerddispatch.com or 218-855-5860. Follow her on Twitter at www.twitter.com/DispatchTheresa .
Theresa Bourke started working at the Dispatch in July 2018, covering Brainerd city government and area education, including Brainerd Public Schools and Central Lakes College.
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