McAlester city councilors approved a proposal to sell city property for an electronic cryptocurrency mining operation — but only after lawyers got together one more time to pound out a mineral rights issue.
In the end, city councilors voted during a special Tuesday night meeting to sell 30 acres at the Steven W. Taylor Industrial Park for $450,000 to a company named MINEEFFICIENCY LLC, which plans to run a Bitcoin cryptocurrency mining operation at the site.
City of McAlester Economic Development Director Kirk Ridenour said the city’s primary interest is in the franchise fees the city would receive for the massive amounts of electricity the facility plans to use, along with sales tax for the sale of the electricity.
City Manager Pete Stasiak declined to speculate on how much that would bring to the city. He said the city gets a 2% franchise fee on electricity in the city and will now get a 4% sales tax fee. That comes to a 6% total the city should receive on the sale and use of electricity at the site.
Ridenour said the property the city is selling is between Krebs Brewery and the former Simonton Windows building at Taylor Industrial Park. He noted the contract for the property sale includes a clause for the city to get back the property if MINEFFICIENCY does not move forward on the project.
“If they do nothing, we get the property back in five years,” Ridenour said.
Following the meeting, David Latz, of MINEFFICIENCY, said the company is anxious to get started at the industrial park.
“We have surveyors out and we’re going to clear and level the land,” Latz said. The company is also working with AEP Energy Partners for the needed electrical service needed cryptocurrency mining operation, he said.
In this case, mining refers to bank of computers trying to solve mathematical equations or other problems to try and win Bitcoins, one of the most well-known forms of cryptocurrency.
Bitcoins and cryptocurrency are defined as digital currency not issued or backed by any government. Bitcoin mining operations are trying to win additional Bitcoins by racing to be the first to solve mathematical equations, using banks of computers in the procedures.
It requires multiple banks of computers operating 24-7 to throw out possible answers to the equations in trying to be first with the correct answer.
To conduct the procedure, banks of computers are stored in data centers called pods, which are steel containers. Plans call for a building to be constructed on the company’s property at the city’s industrial park, while pods with banks of computers inside the steel containers will remain outside. Pods also contain IT infrastructure, power distribution infrastructure and cooling fans, according to information Ridenour provided city councilors.
Pods will connect to transformers used to convert electric current from power lines to the appropriate voltage, the information stated.
“We’re seeing more of this coming to rural areas,” Ridenour said prior to the meeting. The $450,000 price tag for the property worked out to $15,000 per acre for the 30 acres, which is the appraised price.
Before reaching an agreement, the proposal to sell the city property hit a temporary snag when Ward 1 Councilor Weldon Smith asked if the sale of the property included mineral rights, with Smith adding he wanted the city to retain the mineral rights to the property, if the city still owned them.
At that point, no one was sure if the city did own the mineral rights below the surface property, or if they had already been separated before the city came into ownership, but Smith did not want to take a chance on losing them if the city had retained ownership.
Referring to the pending sale, Smith asked “Can you adjust so we don’t include them?”
Oklahoma City Attorney D. Benham Kirk, representing MINEFFICIENCY, said if the city does own the mineral rights, the company would expect it to be included in the property purchase.
With an impasse looming, Mayor John Browne called a recess so Kirk and McAlester City Attorney John T. Hammons could leave the meeting and hold a private discussion to try and resolve the matter. They returned around 25 minutes later.
“I think we reached a solution,” Kirk said.
He said the reason the company wanted to retain the mineral rights if the city owned them was to try and restrict any exploration for minerals while the company owned and used the surface property. If the city would agree to not conduct mineral exploration operations and would agree to resist anyone else doing it, the land purchase could move forward, he said.
Browne, who had earlier made a motion to approve the sale, said he would amend his motion to include that language. Ward 2 Councilor Cully Stevens, who had made an earlier amendment that money from the land sale would go back into economic development, agreed with the mayor’s amendment.
City councilors who were present voted to approve the sale, with Ward 4 Councilor Randy Roden and Ward 5 Councilor Billy Jack Boatright joining Smith, Browne and Stevens to unanimously approve the measure.
Before the council meeting, Ridenour called a special meeting of the city’s Local Economic Advancement and Development Committee at noon Tuesday, with the idea of presenting the proposed sale to that advisory body first, so a recommendation could be made to city councilors as to whether the LEAD Committee supported the sale.
However, only four LEAD Committee members attended the meeting, not enough for a quorum for an official vote. LEAD committee members attending were Mayor Browne, LEAD Committee Chairman Justin Few, Ben Capers and Jim Mills.
Ridenour attributed the sparse attendance to it being a special meeting, not on the regular schedule, with some LEAD Committee members likely having previous commitments.
Contact James Beaty at email@example.com.