Experts have offered a guarded reaction to plans announced last month for a 900-megawatt desert wind farm dedicated to powering blockchain technology.
The $2.5 billion Soluna project aims to provide low-cost energy for blockchain computing and will be located in Dakhla, a city in the disputed territory of Western Sahara.
Since the location has no grid connection, Soluna will have to rely on a co-located data center for computing muscle. But Soluna is confident it will find investors willing to bet on the project thanks to its rock-bottom energy prices.
The site, which was originally earmarked for development by a company called AM Wind, has wind speeds of 22 miles per hour, said Soluna’s CEO John Belizaire. Based on this resource, the company is hoping to obtain power for less than $30 per megawatt-hour.
Regular high winds should also mean the wind farm, thought to be the largest off-grid installation in Morocco — and potentially in the world — could operate with a capacity factor of more than 50 percent.
This still isn’t quite the round-the-clock electricity supply most blockchain companies would enjoy in grid-connected locations, though. The Soluna wind farm will only have “nominal storage,” Belizaire said.
Soluna, which styles itself as a vertically integrated renewable energy and cryptocurrency mining company, hopes to get a grid connection within five years. But a delay in connecting to the grid was what stymied AM Wind’s original project. The company plans to invest $100 million in the first phase of the project that it hopes will generate around 36 megawatts.
To overcome the intermittency issue while the grid work is carried out, Soluna is planning to have what Belizaire said would be “a unique dynamic data center design” that could ramp processing power up and down in step with the wind farm output.
At full ramp, the wind farm should be able to support 4 million terahashes of computing capacity, said Belizaire. The facility will not be used for cryptocurrency transactions, which the Moroccan authorities are opposed to, Reuters reports. Instead, it will provide computing services to blockchain networks that offer calculation capacities to foreign entities in exchange for foreign currency.
Even if the company can persuade investors that the intermittent supply is worth it because of the low cost of electricity, it will still have to provide assurances on the security of its facilities.
Dakhla, which was formerly a Spanish colony known as Villa Cisneros, is the capital of the Moroccan administrative region of Dakhla-Oued Ed-Dahab.
But the region, along with the rest of Western Sahara, is claimed by a nationalist movement called the Polisario Front, which represents a community known as the Sahrawi.
Although the Moroccans and Sahrawi currently have an uneasy truce under a United Nations-sponsored ceasefire brokered in 1991, Morocco’s control of Western Sahara is still under question.
This month, the Trump administration pressured the United Nations to resolve the situation in Western Sahara, based on a Moroccan proposal to turn it an autonomous region within Morocco, as part of plans to curtail the potential for terrorist activity in the area.
But days after Soluna unveiled its wind farm plans, a non-governmental organization called Western Sahara Resource Watch claimed in the Moroccan press that the renewable energy project would violate the rights of Sahrawi people.
Belizaire said Soluna is “fully aware of the political sensitivities of the region.”
“Our investments in Dakhla, Morocco fully respect the legal frameworks that pertain to energy development," he said.
“We are mindful of relevant United Nations Security Council resolutions pertaining to the region, and we are in alignment with the United States' government's view that the Moroccan autonomy plan is serious, credible and realistic," he added.
The Soluna project, which is scheduled to begin construction early next year, with a first phase entering operation in 2020, would help enrich the local economy, Belizaire said.
Besides providing employment on the wind farm itself and its tech business, Soluna intends to allocate 1 percent of its revenue to programs that provide meaningful value to the local citizens of Dakhla, according to the CEO.
Tech industry insiders remained skeptical of whether investors would back the project, though.
Matt Novak, a partner at London-based investment house All Blue Capital, whose investments include Pinterest and Uber, said cryptomining companies have traditionally been very cautious about the siting of their operations, even in Western locations.
Even though energy makes up a significant amount of crypto's operating costs, putting infrastructure in a disputed region of the desert might be a step too far for investors.
Any other blockchain company would “likely be reluctant to operate in an unstable and disputed territory, where a risk of expropriation on their hardware could exist,” he said.
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