(TNS) — The noise that emanates from the cryptocurrency mining operation on Mackinac Trail seven miles south of Sault Ste. Marie is a high-pitched, metallic whine, like a chorus of mechanical insects.
The noise initially registered at 75 decibels, roughly the volume of a running vacuum cleaner, at the edge of Lake Superior Academy’s property on the other side of the road earlier this year, according to the elementary school’s Superintendent Susie Schlehuber.
At the school’s front door, it registered at 65 decibels, she said, about the same as a washing machine.
That high-pitched metallic whine began in March. It has been somewhat dampened by the addition of hay bales to the site, but, apart from a court-ordered two-week pause, it hasn’t stopped, according to a lawsuit filed by the school.
“It’s 24 hours a day, seven days a week. It never stops,” said Schlehuber.
The school she founded has an environmental focus. Its 100 or so students spend a lot of time outside.
“Because of that we noticed the noise even more so than if we were just a school that stayed inside the classroom with the doors closed,” she said.
They stopped conducting lessons on the front lawn, she said. They stopped opening the windows. They shelved plans to build two new classrooms.
The cryptocurrency mining operation, six self-contained banks of machines, is owned by a Boca Raton, Florida, company called Odessa Partners LLC.
Odessa Partners, according to court filings from the company’s attorneys, is made up of two other business entities: Wyoming Partners Irrevocable Statutory Trust, which is registered at an address in Cheyenne; and Valletta Corp, LLC, which is registered in Delaware.
Both of those companies are linked to a Florida man named Michael Carbonara. Carbonara is the CEO of Ibanera, a company that describes itself on its website as a “fintech enablement platform … and cross-border payments network.” He is also the person who applied for the building permit for the cryptomining operation.
He did not respond to phone or email messages, nor did Odessa Partners’ attorneys.
But after Chippewa County Circuit Court Judge James Lambros ordered the operation to stop temporarily last month, Odessa Partners said in legal filings that it was losing more than $15,000 a day by being shut down and that it has already been taking measures to mitigate the noise when the school filed suit, placing hay bales in front of the machines.
The motion also noted that the school property sits alongside Interstate 75. It argued that “the noise Plaintiff claims to be emanating from Defendant’s property is purportedly less than that typically generated by the use and activity occurring on the other side of Plaintiff’s property.”
But Schlehuber said “there’s a huge difference between a loud truck going by a few times a day and constant noise.”
She also said the school had been trying to work with Odessa Partners since March and hadn’t seen any progress toward a sustainable solution.
“We knew we had to do something else besides just talk to them,” she said.
MINING IN NORTHERN MICHIGAN
Cryptocurrency mines marshal massive computing power to guess random numbers.
Because cryptocurrency isn’t a physical thing and isn’t backed by a national government, it relies on a public online ledger to record the transaction any time someone spends or exchanges cryptocurrency.
Cryptocurrency mining in part of the way that those transactions are verified. Miners essentially take unverified transaction and place them into the public ledger by assigning them a unique digital fingerprint.
But coming up with a fingerprint that the system will accept is a matter of luck.
The computers used in mining can often guess millions of numbers a second, but those numbers must be run through a cryptographic algorithm that yields an essentially random result.
It’s like trying to roll double sixes 1,000 times in a row. The only way to increase your chances is to keep trying. Miners who are successful are rewarded with newly created currency and can also share in transaction fees.
The energy consumption involved is huge. Mining a single bitcoin uses as much energy as the average U.S. household uses in 39 days, according to the Bitcoin Energy Consumption Index.
Which is why places like Sault Ste. Marie are attractive, said Kevin Shaw, CEO of a company called OOM Technologies, which operates a computer hosting facility — it’s presently hosting computers for cryptocurrency mining — not far from the Odessa Partners operation.
The cold is part of it. Cooling can account for up to 40 percent of a data center’s total energy use, and “the most efficient way to cool the stuff is through the natural airflow,” Shaw said.
But the more compelling reason for his company was the fact that the local electrical utility, Cloverland Electric Cooperative, was willing to work with them, he said.
“By bringing in a customer that has a steady base and uses more power on a regular basis, they make a little bit of profit from it, they can help stabilize the grid and the power usage of a small area,” Shaw said.
Schlehuber said the school’s first news of the Odessa Partners project came last fall, when a representative from Cloverland approached them to ask for an easement through their property.
When they asked for details, they got only “veiled responses,” she said. “We didn’t really understand who was going in, and so, based on that, the board said no.”
She said that workers setting up the site later told her that Cloverland had “had reached out to them and told them about the availability of the property.”
Asked whether Cloverland had played a role in directing Odessa Partners to the property, a utility spokesperson responded with a link to an FAQ that did not answer the question.
The FAQ, attributed to Cloverland President and CEO Mike Heise, said only that Cloverland had no authority over land-use decisions.
“Data centers contribute steady, high-volume energy use, which brings in additional revenue,” the company notes in the FAQ. “This helps cover system costs and supports long-term rate stability for all members.”
Dafter Township Supervisor Bob Brown did not respond to multiple messages from MLive, but he told WCMU that the uproar around the cryto-mining operation has led the township to consider more specific rules for data centers.
To Schlehuber, Odessa Partners’ decision to operate across the street from an elementary school “makes absolutely no sense.”
“I have no understanding other than Cloverland reached out to them with this parcel that was available, why they would pick that location,” she said.
“It’s like they were looking for a fight.”
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