Brainerd City Council Considers Further Restrictions on Crypto Mining

Brainerd — The Brainerd City Council has enacted new measures to restrict cryptocurrency mining operations within the city.

City council members voted unanimously on Monday, Aug. 5, to have staff draft an ordinance that would exempt cryptocurrency mining, data centers, artificial intelligence centers and other similar uses from the list of permissible uses for outdoor storage facilities. These uses would still be allowed inside the buildings as long as they meet local, state and federal requirements.

“If you don’t want outdoor storage, I think everyone would be happy if you communicated that up front,” Council President Kelly Bevans said.

The move comes after city council members in July rejected a provisional use permit for an open-air storage facility in an industrial park that VCV Digital Infrastructure planned to use as a cryptocurrency mining facility.

The company proposed building 26 40-foot-long storage containers to house data machines and cooling towers for its operation at 1918 Thiesse Drive. City council members granted the company a permit in 2022 to install 12 20-foot-long containers and 12 cooling fans, but that permit expired after VCV failed to make improvements to the property within a year of it being issued.

The request to ban crypto mining at the outdoor storage facility came from Sarah Thies, who lives near the facility in question and was one of several neighbors who spoke out against VCV’s proposal. Thies and other residents raised concerns about noise and the potential environmental impacts of the facility operating 24 hours a day. Bevans approved putting the matter on the agenda for Monday night’s meeting.

Questions have arisen about a cryptocurrency mining facility currently operating within the industrial park, with City Councilman Gabe Johnson asking why the two businesses are being treated differently.

Just for Crypto operates crypto mining on Kitty Hawk Court as an accessory use, not a primary use, and does not need a council-approved interim use permit. The landowner owns three parcels of land there, and Johnson questioned whether it is actually a primary use and not an accessory use, since the crypto operation is technically on a different parcel from the primary use building. Community Development Director James Krambick said that under past staff, the city often considered adjacent parcels owned by the same person to be one property, and that is the case with schools. He said one of his goals is to consolidate such properties throughout the city so they can comply with the city’s zoning laws. He said he plans to work with Just for Crypto’s owners on that issue.

After considering several options Monday night, the city council agreed to have staff draft an ordinance that would ban cryptocurrency mining and its use as outdoor storage. The ordinance will first go before the Planning Commission, which will host a public hearing on the issue.

City Councilman Mike O’Day noted that one advantage of having crypto mining indoors is that if a crypto company decides to move away, the buildings would remain for future use, as opposed to simply having empty storage containers on the site.

The city’s Economic Development Department, Public Utilities Board and City Council will be holding a workshop at 5 p.m. on Tuesday, Aug. 6, at City Hall to discuss alternatives to erecting a building in place of the outdoor storage containers at VCV Digital’s Tiesse Drive site.

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Theresa Burke began working at The Dispatch in July 2018 and covers Brainerd city government and education in the area, including Brainerd Public Schools and Central Lakes College.