Bitcoin

Bitcoin mining in Navajo land yields jobs, revenues while revealing economic disparity

tiffany nelson knew little about cryptocurrency when she first stumbled upon a temp job in 2019. a canada-based company called westblock was recruiting “manpower,” in nelson’s words, to help unload boxes at a data center facility on land. belonging to the Navajo Nation.

a navajo who lives on tribal land, nelson found the job odd because of its proximity to home. with a total tribal population of 400,000 people, only about 170,000 live on the reservation. that is most often attributed to poor economic conditions and limited employment opportunities, especially for women.

Reading: Bitcoin in navajo nation

Although grateful for the opportunity, Nelson’s employer initially did not tell him what the company’s business was in the New Mexico reservation.

Another Navajo woman, Kennette Phillips, who was hired around the same time, recalled similar misgivings about her employer’s mysterious business.

While security guards patrolled the site, Phillips, Nelson and another employee unloaded the boxes, then began setting up the machines inside.

“When we opened the boxes, we found these machines that looked like toasters,” Phillips recalled. “They didn’t tell us what they were for. It seemed a bit sketchy…we didn’t know if what we were doing was legal.”

part of their growing concern was fueled by the crisis rates of indigenous women who have been kidnapped or murdered in canada and the united states.

When the two women, both single mothers, finally asked their employer what the site would be used for, they discovered to their great relief that the company intended to use toaster-like machines to mine bitcoins.

Bitcoin mining is the computationally heavy process of computers validating the bitcoin transaction network. while the cryptocurrency supply is limited to 21 million coins, it distributes a small portion of that supply to miners to contribute computer power, thereby securing the network.

The job can be lucrative, especially since the price has more than tripled in the last year. bitcoin mining requires specialized computers, the infrastructure to host them, plus a robust and stable power supply.

“oh wow. It’s okay,” Nelson recalled thinking with relief. She didn’t claim to understand the full extent of how bitcoin worked back then, but she did know that it was a cryptocurrency, “like internet money.”

See also: Die 16 Besten Krypto-Börsen im Vergleich (2022) Finanzwissen.de

three years later, nelson and phillips manage site operations full time. In addition to two other full-time managers who together keep the operation running day and night, the facility also employs four to six security guards to protect its expensive mining equipment, which is valued in the tens of millions of dollars, according to the CEO of westblock. ken maclean.

use of unused energy sources

Like many other bitcoin mining operations, this project benefits from harnessing energy that would otherwise go unused. After the closure of a nearby coal-fired power plant, the Navajo Tribe Utility Authority (NTUA), a nonprofit organization owned by the tribe, had an additional 15 megawatts of electricity load for which they were taking over. cost.

According to Westblock’s Maclean, the energy the operation draws from ntua comes from a combination of solar, hydroelectric, nuclear and natural gas, with 60% attributed to renewable energy. The situation reflects the Navajo Nation’s broader and more economically difficult energy transition from fossil fuels to renewable energy sources over the past decade.

Historically, most of the tribe’s income has come from leasing land to energy extraction companies, with leases for oil and gas mining operations accounting for 51% of the tribe’s total income since 2003 .

Critics of the high energy consumption of bitcoin mining are quick to point out that bitcoin now accounts for 1% of the planet’s energy consumption. While direct comparison can be tricky, the computational power that goes into securing bitcoin consumes more energy than all the refrigerators in the US. uu. but less than the total energy used to produce paper and pulp worldwide, according to the center for alternative finance at the university of cambridge.

in addition, westblock’s bitcoin mining project currently uses 7 megawatts of ntua’s power with plans to eventually use all 15 megawatts in the near future. Relative to other regions within the Navajo Nation, the project’s energy consumption suggests some economic disparity.

A three-hour drive west of the site, in the Black Mesa region of the country, many residents live without electricity or running water.

the need for the Navajo Nation to diversify its economy

but the effort to transfer power from one part of the nation to another is not so simple, according to carl slater, delegate to the navajo nation tribal council. Roughly the size of West Virginia, the Navajo Nation is the largest independent territorial authority within the United States. and its power grid is neither connected nor evenly distributed across its 17 million square acres.

Surprised, to say the least, when he first heard that a developer was mining bitcoin on Navajo land, Slater told yahoo finance that the opportunity could be an economic boon to the nation, if the proceeds paid to his company utilities may end up serving the nation’s residents.

“The utility that the nation owns would simply have had to absorb the cost of that power. using it in a way that generates revenue for the nation is good, but I think there is a shared responsibility between the nation, the utility and the developer to find a process whereby more of the revenue can be directed to our local communities,” slater said.

andrew curley, assistant professor of geography at the university of arizona, said the nation’s move to bitcoin mining is just the latest iteration of its longstanding need to diversify its economy.

See also: Mining Bitcoin at Home Just Got Easier for Crypto Investors | Money

“Tribal leaders are trying to make the reservation a place where companies, as well as extractive industries, can do business and hire people,” said Curley, a member of the Navajo Nation, who lives off the reservation.

A sociologist by training whose research focuses on the Navajo Nation’s energy transition, Curley called the bitcoin mining project an “interesting prospect,” but also acknowledged that the nation’s energy disparity is relative to different local communities. While some communities remain without power, he said utilities bear the brunt of the responsibility, explaining that, overall, the Navajo Nation “consumes well below the amount of energy it produces.”

Thinking about other economically struggling nations that have or are considering adopting cryptocurrencies more broadly, such as El Salvador, Curley is quick to point out the obvious problem with making crypto play a larger rule in the economy of the nation.

“There is an innate problem and challenge when poorer people are asked to take on riskier technology transfers,” Curly said.

Although the westblock mining operation opened in 2020, this year marks the first time the project has turned a material profit. Tribal utility NTUA, on the other hand, has yet to disclose its full income from the effort, but should do so in early 2022. In addition to monthly internet and electricity income paid to NTUA, WestBlock also pays taxes, rent for the lease of their land as well as scholarships set aside for the local community.

A person familiar with the Navajo-based operation said the revenue generated from the project this year is “in the millions” and that Westblock is working with ntua along with other tribal chapters to find other sites on the land, which could be used for bitcoin mining.

“I’m happy to have a job close to home, especially since so many people lost their jobs during the pandemic,” Tiffany Nelson added. “It’s been a good ride and something I’m proud to be a part of.”

david hollerith covers cryptocurrencies for yahoo finance. follow him @dshollers.

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See also: Investor Alert: Watch Out for Fraudulent Digital Asset and Crypto Trading Websites | CFTC

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