City, business leaders want more data centers in Grand Forks. What does that mean?
Joshua Irvine, Grand Forks Herald
5 min read
May 22āGRAND FORKS ā On the western edge of Grand Forks, south of the lonely DeMers Avenue Amtrak station and the city wastewater lab, sit two oblong beige warehouses behind a chain-link fence.
Inside each are rows and rows of computer banks two stories high, conducting trillions of calculations every second, and using massive amounts of electricity to do so.
This is a data center, and some city and business leaders believe bringing more of them to Grand Forks could boost the region's economy and serve as a financial windfall for the city.
Demand for data centers, which do everything from cloud storage to machine learning (think ChatGPT), is exploding across the United States. A 2023 report by McKinsey and Company projected demand for data center services would climb 10% per year into 2030.
Three companies currently operate data centers in Grand Forks, and an informal working group set up by Mayor Brandon Bochenski is exploring the possibility of bringing more to the community.
"We want to be a hub and a continued home to data storage and analytics," said City Administrator Todd Feland. "It really fits our high-tech role."
Grand Forks has a few things going for it as a potential data center hub, according to Minnkota Power Economic Development Administrator Matt Marshall. It's cold (data centers run hot, and need a lot of cooling), electricity is cheap, the city is part of the Midwest's historically reliable electric grid, and local officials like Bochenski are open to doing business.
"Grand Forks, the city and the state have set up a really beneficial economic development environment," said Aaron Hall, who cofounded Grand Forks' first data center operator, Sundog Mining, in 2021.
In exchange, Grand Forks collects commercial property taxes on the facilities and a franchise fee from utility providers for electric usage.
"For large users like that, that (franchise fee) could be a gigantic revenue stream," said Keith Lund, president and CEO of the Grand Forks Region Economic Development Corporation.
In 2020, before data centers began setting up shop in Grand Forks, the city collected around $390,000 in franchise fees from Nodak Electric Cooperative, Feland said.
Last year, it collected $772,000 in franchise fees. (It collected more, around $860,000, in 2022.)
The site on the western edge of town, owned by Texas-based Core Scientific, is currently valued at north of $7 million and will generate north of $100,000 in property tax revenue when a five-year exemption on the site expires in 2027.
All three of Grand Forks' data center operations currently focus on cryptocurrency mining, an industry built on a volatile commodity with a rocky public reputation. Hall, of Sundog Mining, called the industry the "red-headed stepchild" for data centers.
Take Core Scientific: the company was feted by city and business leaders when it commissioned its 100-megawatt facility in November 2021.
Thirteen months later, the company
filed for bankruptcy
after the value of crypto dropped in 2022. The company underwent a 13-month Chapter 11 reorganization, emerged from bankruptcy in January, and
was profiled at the EDC's annual meeting
in March.
Core Scientific did not respond to requests for comment during the reporting of this story.
Lund and Feland separately made the case that even sometimes unstable industries like crypto mining are diversifying Grand Forks' economy.
Lund further points out that while he's confident in the ultimate success of Core Scientific, "the infrastructure that develops is extremely valuable now and for the future."
For the city's part, Bochenski says he's more interested in pursuing data centers that run AI workloads after celebrity investor Kevin O'Leary's visit to Grand Forks in January.
O'Leary
made the case for North Dakota as a hub for AI data centers
and hinted at plans to invest in a data center in the state.
Bochenski also pointed to the growing focus on AI in the city's drone industry and increasing research focus on the subject at UND.
"That's just a little bit more intriguing because it has the potential to benefit what's going on at Grand Sky, there can be partnerships with the university, it can just bring more life and activity than just something that's machines churning power to create digital assets," he said.
Core Scientific, incidentally, recently announced plans to convert some of its infrastructure to power AI workloads, according to a May 8 report from Bloomberg. (The report did not specify which of its data centers were being converted.)
Outside Grand Forks, observers are casting an increasingly critical eye on the exploding data center industry.
Lawmakers in mid-Atlantic and Southern states are reevaluating their early investment in data centers amid concerns over their impact on the reliability and affordability of their electric grid.
In February, the Washington Post published a feature outlining how residents in Northern Virginia were beset by noise pollution and other aggravating factors as data centers were built feet from residential homes.
Data centers also add massive amounts of electricity need as regional grids struggle to meet transmission demand.
The Midcontinent Independent System Operator, the Midwestern regional grid known for its reliability, released a report in February raising concerns about a "hyper-complex risk environment" as the grid deals with an increasing number of extreme weather events and power generators move to renewable energy sources.
(Hall said Sun Dog is among many data center operators that work with MISO and power down during periods of high strain on the grid.)
Bochenski said the city is doing the work now to address those issues.
"That's the whole point, to get in front of these issues. So rather than having someone come and put a data center in an existing residential area, you want to be able to plan out ahead," he said. "It's trying to get ahead of those (issues) to make sure that you get the most benefit without creating more concerns."