Energy start-up company Grid Share has announced plans to launch a bitcoin mining data center next to a hydroelectric dam on New Zealand's south island.

The 2MW facility is located directly next to Pioneer Energy-owned Monowai Power Station. Representatives for the company have confirmed the partnership with Grid Share, enabling the bitcoin mine to run on hydroelectric power, right at the source. The cryptocurrency mine will use up to 30 percent of the maximum electricity generated by the power station.

The data center has also been designed to that it can become a 'cloud-based high-performance computing facility' in the future. Further details of the building have not been released.

The start-up, founded by New Zealand entrepreneurs Tom Algie, Sam Kivi, and Craig Lusty, all of whom have primarily renewable energy-based backgrounds, buys renewable energy when it is plentiful and powers off computing when the energy demand is higher or supply is low.

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– Lake Monowai

The company's CEO, Tom Algie, said of the partnership with Pioneer Energy, that it was “a step towards supporting the transition to 100 percent renewable energy in New Zealand”.

“Renewable energy production doesn’t match demand – we can’t tell the wind to blow so we can turn on the lights. This mismatch causes volatile energy markets and stalls renewable investment [which is] a growing issue as renewables increase.

“Renewables need a customer who can buy power when the grid doesn’t need it and turn off during peak periods," he added.

Pioneer Energy contracting general manager Peter McClean said: “The data center is something that can use power close to the source because it has the ability to be turned off quickly if the power station isn’t generating, or needs to be cut back. So that’s what makes it different, that’s the driver for us.”

The data center has been kicked off with the initial $2 million capital raised, though further funding is being sought to promote growth.

Monowai Power Station, fed by the Monowai River from Lake Monowai in Southland, began construction in 1921 and is one of New Zealand’s oldest hydroelectric plants. Its generating capacity has now increased to 7.6MW.

With highly intensive computing needed to mine cryptocurrency, the industry has had a dramatic impact on the grid in several different countries. Last year, Kazakhstan suffered a multitude of power outages with the grid unable to keep up with demand from cryptocurrency.

Monowai Power Station project is not the only one of its kind. In March 2022 Lake Parime announced its plans to build a 10MW data center close to the Clyde dam, also in New Zealand on the south island, and to be used for bitcoin mining.

Steve Canny, the strategic projects general manager at Great South, Southland's regional development agency, has speculated that the appeal of the area is likely due to the cooler temperatures, which means the data centers will require less energy for cooling.

Grid Share won’t be alone in the Lake Monowai area. Another data center was announced in March that would draw on power from the Monowai Power Station by the T4 Group. This facility will provide colocation services.

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