Western South Dakota's Only Ranch Station

S.D. regulators okay new rate structure for MDU bitcoin data centers

PIERRE, S.D.  — A North Dakota utility company has gotten the go-ahead to offer a special rate on electricity it hopes to sell to customers in South Dakota engaged in a new kind of mining — for cryptocurrency.

The South Dakota Public Utilities Commission gave its approval on Thursday to the request from Montana-Dakota Utilities.

According to the company, a 40-foot data center container for bitcoin-type processing typically uses 1 megawatt of electricity.

“The new rate schedule is being proposed in response to recent inquiries for electric service to facilities housing blockchain technology where the load characteristics of such facilities far exceed those of a typical general electric service customer today and whose unique operations require terms and conditions specific to these customers,” MDU said in the application.

MDU officials said the rate would be available to other high-density computer processing facilities, too. MDU will bring each electric-service agreement back to the South Dakota commission for review and approval. Each of those contracts would have its own rate.

The data customers will have to pay ahead for any related upgrades by MDU, leaving rates unchanged for other customers, (the company provides electricity to 30 communities in north-central South Dakota, from Mobridge to Fort Pierre) while allowing MDU to offer individualized pricing structures. MDU put the special rate into effect in North Dakota on November 1, 2022. The company has one pending contract in North Dakota.

“I really do appreciate the way this has been put together,” commissioner Gary Hanson said. Commissioner Kristie Fiegen said the topic of data centers has given “commissioners across the country heartburn” and liked that the South Dakota commission will need to approve each agreement.

Chairman Chris Nelson thanked MDU “for being pro-active for bringing this tariff to us.” He said it appears that MDU is “concerned about the right things.”

“I appreciate that and will support this,” Nelson said.

Bitcoin is the current buzzword in technology circles. Even though bitcoin remains popular in investing and technology sectors, some changes to the cryptocurrency market have stranded bitcoin miners as some governments are taking steps to make bitcoin mining illegal.

However, the United States remains one of the more bitcoin friendly governments.  Miners who have previously set up shop in countries like China are now making their way stateside.  The demand for data centers to accommodate bitcoin mining is now growing across the country.

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