First bitcoin mining in Alabama is scheduled to begin July 4 and will take place in front of a 7-year-old museum in downtown Mobile.
Distributed Ledger Inc., under an agreement with the City of Mobile and in partnership with the GulfQuest Maritime Museum Board of Trustees, plans to take a Maersk shipping container and turn it into a mining operation bitcoins 24/7.
The layout of bitcoin mining inside a shipping container will also be an outdoor and educational feature for visitors to the maritime museum. It will be located at the south end of the museum and on municipal property adjacent to the Mobile Alabama Cruise Terminal.
“This type of unit was chosen on purpose to celebrate the shipping containers and related equipment seen in the marine industry and the Port of Mobile,” said Jim Anderson, vice president of operations at Distributed Ledger Inc.
Mike Dow, former mayor of Mobile and current executive director of GulfQuest, said there was no upfront public risk or cost to the city. Distributed Ledger will be responsible for paying for its own electricity, which in other mining operations in the United States can be quite expensive.
Under the agreement, Distributed Ledger will pay the museum’s board a monthly rent of $1 plus 20% of net operating income from bitcoin mining.
All proceeds from the operation will be redirected to city-owned GulfQuest and will be used to pay off the museum’s remaining debt from an expensive construction project that was completed in 2015. According to Dow, approximately $1 million debt are owed on a museum that initially cost around $60 million to build.
“There’s no liability, they have insurance and it’s their money,” Dow said. “They will provide the mining revenue to the council. It is obvious. And if that doesn’t work, they would take a truck and move (the container) off (the property). »
GulfQuest’s activities come at a time of cryptocurrency volatility, but none of this is about Dow and others who believe in its potential. Bitcoin, the world’s largest digital token launched in 2009, has seen its value drop 50% since its peak in November. It continued its downside struggles on Thursday, falling as low as $25,402 – its lowest level since December 2020 – before rebounding.
“Recently, gas prices have tripled,” Dow said. “So that’s the problem. We are currently in an (economic) swing. It won’t be there forever. These ups and downs come.
He added, “If the city were to invest $2 million to do this, I would take a step back. But the private sector does it and there is no accountability.
James Barth, Lowder Eminent Scholar Finance at Auburn University‘s Harbert College of Business, said the timing of the mining operation comes as cryptocurrencies face wild market swings, a “ripple effect.” overflow because we have a lot of inflation”.
“A lot of people are looking for safer assets and see cryptocurrencies as less safe,” said Barth, who is also a Senior Fellow at the Milken Institute and a Fellow at the Wharton Financial Institutions Center. “There is also a lot of uncertainty regarding monetary and fiscal policy and Ukraine. When that happens, people turn to safer sets of assets to acquire.
Problems in other parts of the United States – especially in rural areas of Tennessee and West Virginia – emerged with bitcoin mining. Noise, unsightliness and high energy consumption have been complaints associated with operations elsewhere and cited in national media reports.
Dow said none of these concerns were a problem with the GulfQuest operation.
The city does not pay the energy costs. Distributed Ledger will manage the costs of energy produced by mining, and their estimated energy consumption will be paid for one month in advance.
“While the city has a very limited role in this operation, we are encouraged by the GulfQuest Board of Directors to seek creative ways to generate revenue,” said Candace Cooksey, spokesperson for Mayor of Mobile Sandy Stimpson. . “There has been a lot of talk about how blockchain technology could benefit the shipping industry, so it seems like a natural fit. We look forward to seeing the operation unfold.
The entire project consists of 100 miners and will use 310 kilowatts of electricity, which is already present at GulfQuest and is factored into Alabama Power’s demand load.
Anderson said the energy used is “only what already exists to provide not only a source of revenue for the museum, but also educational opportunities.”
Noise won’t be an issue, Dow said. Total sound production should be reduced by the design of the mining container. The container itself is only 15 feet long and will be located away from the museum’s day-to-day operations, Dow added.
Anderson said a normal conversation can take place “within 20 feet” of the operation.
“It won’t affect the Mobile Alabama cruise terminal in that regard, which I’d bet makes a lot more noise on its own,” he said.
Dow is touting blockchain and bitcoin as the next level of internet technology and digital outsourcing in the shipping industry that is already tracking and receiving – including enabling digital cryptocurrency payments – global containerized cargo.
He said there is potential for mobile businesses and industry to be more competitive, citing the Maersk Shipping Blockchain Network as the next evolution of the wide-area, encrypted internet. Maersk already owns 50% of all container shipping in the global shipping industry on its network, Dow said.
Mobile, Dow said, barely knows much. He said GulfQuest is the perfect place for mining, noting that it can provide an educational opportunity.
Dow said the GulfQuest board and the city have already taken a crash course in the emerging technology.
“It took a long time to get this contract,” he said. “There was a lot of education involved and going through the attorneys and making sure it wasn’t a liability or something that had some form of inconvenience for GulfQuest and the city.”