The CEO of the company that hopes to build a data center equipped for mining cryptocurrency west of Butte says he’s not worried about the price of bitcoin, which has fallen from its all-time high of $19,783 in December 2017 to around just $3,200 as of Friday evening.
In fact, Aaron Tilton, co-founder of Power Block Coin LLC, the entity behind the proposed facility, says the fallen price may actually be a boon for some miners.
Tilton — who’s also the chief executive officer and president of Utah-based Blue Castle Holdings Inc., the parent company of Power Block Coin — said that as the price of bitcoin goes down, the cost of mining equipment also tends to decrease because of lower demand, making it a good time to invest in equipment for those who are willing to stay in the crypto sphere in the long haul.
Power Block Coin first announced its intentions for its Butte facility back in February, when Butte-Silver Bow’s Council of Commissioners approved a development agreement with the company, allowing it to build a data center at Montana Connections Business Development Park, an industrial area west of Butte overseen by Butte’s Tax Increment Financing Industrial District.
The site in question is north of REC Silicon, across the street on Rick Jones Way.
At the time, the company said it planned to invest $251 million over 36 months in Montana Connections, including more than $8 million to build new electrical infrastructure and a substation. The proposed 135-megawatt facility would house mining equipment in 70 to 200 separate units, ranging in size from large warehouse buildings to small shipping containers.
Tilton estimated that the project would break ground in the summer and that the site would initially support around 15 employees.
Now, 10 months later, the ground on the site remains undisturbed.
Tilton says the company is still in the midst of securing electricity for the facility and won’t be able to move forward until the electric component of the project is complete.
“When we initially announced the project, all of those things are contingent upon transmission, and so we’re working on some of those details,” the CEO said.
Operations like Power Block Coin are considered to be industrial users of electricity by NorthWestern Energy, and those who plan to consume over 1 megawatt of power are sometimes asked to commission a load interconnection study with the power company before they can move forward.
Butch Larcombe, spokesperson for NorthWestern, said the power company has had “continued contact” with Blue Castle Holdings, but said he couldn’t give any additional details.
Montana Connections isn’t the only site Power Block Coin hopes to develop.
Tilton said company leaders plans to develop three additional sites into similar datacenters and hope to break ground at one of the sites, including the one in Butte, in the first quarter of 2019.
Tilton did not divulge the location of the other three locations, citing confidentiality.
“I’ll just say this, there are others in Montana,” he said.
When asked if the fall of bitcoin’s value might affect the viability of the Montana Connections project, Tilton said he’s not concerned.
One reason is that Power Block Coin’s primary job won’t be to mine cryptocurrency (though Tilton said the company hasn’t ruled out entering into joint ventures with prospective clients on that front).
Instead, the company aims to be more of a service provider, playing host to clients by providing space, infrastructure, and power to their mining operations.
The company already has clients lined up, according to the CEO, and some of them could be coming into the game at a time when demand has chilled.
“For some of our clients, it’s a better time to invest because it’s cheaper now in terms of the hardware, the mining equipment, (and) some of these other things they have to purchase,” said Tilton.
Howard Wu, a Bay Area-based cryptocurrency researcher and managing partner at Dekrypt Capital, said the price of bitcoin could indeed have an effect on the market for mining equipment.
“Mining is a fundamental part of how bitcoin works,” Wu wrote in an email message. “For long-term supporters, the current bitcoin price correction isn’t a deal-breaker. If the price continues to hold at current levels, I foresee suppliers of mining equipment lowering their premiums to meet market demand.”
Tilton knows a thing or two about power.
A former Utah state legislator, Tilton served on the state’s House Public Utilities and Technology Committee. He previously worked in hardware and software development, helped develop an online pharmacy, and worked on a number of power projects.
When asked to describe what Blue Sky Holdings does, Tilton replied, “We invest in infrastructure.”
The company has been involved in oil and gas pipeline projects and in nuclear power.
In the mid-2000s, the company embarked on a project to bring a nuclear power plant to a site near the Green River in Utah. The project continues to be in development.
There’s lots of volatility in the crypto market, Tilton noted, and new currencies and new technologies that make use of blockchain, the underlying innovation behind the bitcoin network, are sure to come online down the road.
But rather than picking winners and losers among emerging blockchain technologies, Tilton said his company has instead decided to focus on the things that all these technologies have in common: the need for power and infrastructure.
“The winners will keep winning, whoever they are,” he said. “What we’re trying to do is not bet on any of them but basically invest in what they all use regardless of who’s winning at any point in time.”