Proposed crypto data center won’t raise electric rates in Madison, city says – Sioux Falls Live
MADISON, S.D. — The City of Madison’s staff addressed recent public concerns about a proposed data center at its pair of town hall meetings on Jan. 28, saying it’s not believed the center would raise electrical rates.
Members of the public have shared dismay at previous meetings and on social media at the idea of a data center over the past several weeks. The city commission is in the process of rezoning land next to the Madison Generating Plant from agricultural and highway business to light industrial use to accommodate a data center.
The proposed facility, which would be operated by Giga Energy, would be a small-scale data center that focuses on cryptocurrency mining rather than powering artificial intelligence systems.
Cryptocurrency centers require a lot of computational power, and they solve complex math puzzles to validate transactions made using cryptocurrencies like Bitcoin. The cryptocurrency data centers, or miners, are responsible for proving a transaction occurred and recording it, adding it to a decentralized ledger. As a reward for validating transactions and keeping the network secure, the centers earn new units of the cryptocurrency, according to the Crypto Council for Innovation.
Wren Murphy / Madison Daily Leader
Mike Plooster, utilities director, and Jameson Berreth, city administrator, said the proposed crypto center would be air-cooled, only require water hookups for bathrooms, could be turned off in case of high electricity needs during an emergency and would have a small physical footprint. The facility, as currently discussed, would use 10 megawatts of power. When constructed, the facility would account for about 3.5% of metered electrical sales in the city, per current estimates, they added.
Tentatively, Giga Energy’s facility would be brought online by August 2026, they said.
Cryptocurrency mining centers are interruptible, meaning their use can be shut down during key points, while artificial intelligence data centers are not, according to multiple sources.
The complex would be located next to the Madison Generating Plant just off of Highway 34, north of Buffalo Ridge Concrete and Custom Touch Homes, Plooster and Berreth said. It would include four to six shipping containers full of computer equipment on the 3.75 acres of land.
Giga Energy’s proposed facility would require additional hookups and would run on a different circuit from the city, Berreth said. The different circuit would mean an outage at the center wouldn’t affect the city. The mining facility would be responsible for that increased infrastructure cost, as well as the cost of decommissioning the center should it ever be shut down, with Giga Energy paying into a fund in advance.
Any improvements to the electrical system required by the data center but not by the City of Madison would be on Giga’s dime, he added.
Plooster estimated the center would generate $425,000 per year in electrical funds for the city. Plooster claimed it would encourage electrical rates to go down for residents, as the additional revenue could be used to pay off loans and sunset surcharges faster than previously planned.
“Rates with the data center will be lower than rates without the data center,” Berreth said.
A reserve deposit to cover electrical usage would also be required from Giga.
In addition, the city estimates it would receive $66,000 in sales tax revenue from Giga Energy based on electrical purchases, with other potential income from a land sale or lease, as the city owns the property in question.
“We don’t want a lot of risk involved,” Plooster said.
However, the city has planned electrical rate increases for the coming years. These rate increases and surcharges are to pay for upgrades to Madison’s electrical grid brought on by changes in the industry.
The Western Area Power Administration is switching to 115 kilovolt infrastructure, but Madison is currently at 69 kilovolts. The City of Madison purchases power from Western Area Power Cooperative and needs to get up to that standard by the time it discontinues its 69 kilovolt transmissions.
The substation next to the proposed facility is being upgraded to handle 115 kilovolts, and that upgrade “will continue no matter what,” Plooster said. But, the substation upgrades and the cryptocurrency center are slated to be completed and go online in August 2026 to reduce the load on other areas of the grid, he said.
All costs related to the cryptocurrency center will be shouldered by Giga Energy, Plooster and Berreth stressed.
Other concerns the city is looking to address relate to electromagnetic emissions and noise, and that would be discussed at future planning commission and city commission meetings. Since data centers are a conditional use, they would require a permit from the city to operate, and the city would be able to attach conditions regulating noise and emissions as part of that permit.
In recent months, the City of Madison has agreed to a letter of intent with Giga Energy. This does not guarantee the project will be built, but it allows the city and Giga Energy to have more conversations and begin planning for one.
The City of Madison also has signed on with Heartland Energy’s Demand-Adjusted Technology Advantage (DATA) program, which is an interruptible rate for data centers that can decrease or stop use during peak demand times, like during an emergency, according to Heartland Energy’s website.
As part of this program, data centers will be offered a special rate for stable power in return for those conditions on interruptibility, Heartland Energy CEO Russell Olson told the Daily Leader. He said the rate is based on what other organizations in the electrical and crypto industries are using. The data center would not receive any loans or tax breaks, and the risk is on Giga Energy rather than the city or Heartland Energy, he added.
McCord Stowater, Heartland’s director of market operations, explained the special rate involves giving Giga Energy access to the wholesale energy market. Heartland is always generating and purchasing energy to meet its demand, and it also sells off power to other electrical companies. The wholesale market’s prices change every five minutes, with electricity more expensive during times of peak demand and lower generation, like a winter storm, and less expensive during times of low demand and high generation, like when people go to bed on a windy night.
Heartland Energy acts as a stabilizer for most of its customers, ensuring people pay a stable rate for the electricity instead of paying different rates at different times of the day and year, Stowater said. Through Heartland, Giga Energy will have access to the wholesale market, meaning it will be able to purchase power during times of low demand and low prices and throttle its usage during times of high demand and high prices. Giga will also pay an add-on charge of $0.01 per kilowatt hour.
Audrey Richardson/REUTERS
Cryptocurrency centers are significantly different in scale from artificial intelligence data centers, though large crypto mining facilities can be converted to AI data centers.
AI data centers require more electricity, water and reliability than crypto centers, according to a Forbes Technology Council article. AI data centers must run 24/7, while crypto centers can be cut off from electricity in times of high need.
Large AI data centers can require more electricity than a city, pushing up demand for electricity without increasing supply, according to Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative, in an article on Harvard Law’s website. Peskoe also said electric and utility rates increase when data center demand requires drastic infrastructure upgrades, with those bills often being footed by residential and business consumers rather than the utility company or data center.
These rate increases have been a particular concern for members of the public, including Jim Thompson, who attended the Jan. 28 town hall.
Thompson shared that he is not completely opposed to this planned cryptocurrency data center. Before attending the meeting, he was envisioning a much larger project focusing on artificial intelligence. His main concerns were electrical and water usage and utility rates.
Thompson plans to keep an eye on how contracts and agreements are written up but added that he feels the town hall addressed most of his concerns.
“There’s not much of a downside,” Thompson said.
Recordings of Madison’s town hall meetings are available on
