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May 29, 2019 News » Cover Story

A neighborhood says it’s barely tolerating the constant buzzing from a Bitcoin mining operation 

Noisy neighbor

click to enlarge Ron Graham-Becker holds his decibel meter one recent afternoon in his backyard, some 350 feet from the plant. The meter reads 56.1, slightly over the 55-decibel limit set out in the city’s ordinance. - PAM ZUBECK
  • Pam Zubeck
  • Ron Graham-Becker holds his decibel meter one recent afternoon in his backyard, some 350 feet from the plant. The meter reads 56.1, slightly over the 55-decibel limit set out in the city’s ordinance.

Returning from a road trip last October, Eileen Armstrong unpacked, caught up on her mail and plopped down to relax at her home on Chutney Court in northwest Colorado Springs.

Then she noticed a strange, incessant hum.

“What is that sound?” she wondered.

She and her husband, Bob, soon figured out that the noise — described by neighbors as an “idling C-130 aircraft,” “a freight train” and “a low-grade buzz” — radiates from the former Intel plant at 1625 Garden of the Gods Road, about 350 feet from their home.

That was eight months ago, and the noise still penetrates homes, like the Armstrongs’, situated across a ravine from the plant. 

There, John Chen cranks out profits by mining Bitcoin and other related cryptocurrencies. (On May 28, Bitcoin was valued at $8,682 each.) The operation relies on thousands of specialized computers that, in turn, require huge exhaust fans to cool them — fans that run nonstop and send sound waves south to the Chelsea Glen neighborhood, where residents can hear them through the walls of their homes.

The problem isn’t unique: Other cities and countries have also been forced to address noise pollution from cryptocurrency mining, as well as high energy use. Solutions vary from a moratorium on mining to building barriers to muffle the sound. 

City officials issued a notice of violation letter to Chen on May 14 after neighbors complained of the noise for months and alleged the plant violates the city’s noise pollution ordinance.

City Councilor Don Knight, who represents that geographic area, says he and Chen agreed that he’d fix the problems within 90 days of March 22 when they discussed the complaints, but so far Chen’s efforts have failed.

Chen recently adopted a new strategy that involves shipping containers, as well as changing exhaust fans to lower-decibel models.

“I will pull everything together that’s required to fix it,” he says, “I know it can be fixed.”

But residents in this subdivision of about 170 homes valued between $300,000 and $400,000, have endured the constant hum for months, and they’re tired of waiting.

Eileen Armstrong can’t sleep without medication, another neighbor describes himself as sleep-deprived and irritable, and another family sleeps with earphones that pipe in music to drown out the monotonous groan.

“We spent $50,000 to $70,000 on our outdoor space,” Armstrong says. “We spent 20 years making this our oasis. We have a right to enjoy our property, and we can’t even use it. It’s sad that they’re trashing our neighborhood.”

Chen’s California-based 3G Venture II LLC bought a portion of the former Intel property about a year ago for $13 million and installed a cryptocurrency mining operation, the first in Colorado Springs.

Colorado Springs appealed to him, Chen tells the Independent, due to the availability of plentiful power at competitive prices and cheap property — Intel idled the campus about a dozen years ago after selling the computer chips line they made there.

Chen says his Bitcoin mining plant pulls 30 megawatts of power — enough to serve thousands of homes — and  acknowledged his monthly power bill will exceed $1 million at full capacity. City-owned Colorado Springs Utilities declined to confirm usage, citing customer confidentiality.

He says he’s postponed trying to get more power capacity to the plant until “everything is operating smoothly.”

The building currently in use — a fraction of his total space — sits immediately north of the south property line, which borders Sinton Trail. But Chen’s interest doesn’t stop there. He says he has a “vision” for his roughly 510,000-square-foot compound. Chen wants to convert the buildings into a high tech campus, or “innovation corridor” for cybersecurity research and other technology applications.

“When you have an incubation center and you grow, where do you grow, because there’s no space to expand?” he says. “Here, there’s plenty of space to expand. I see this as a crown jewel for business and industry development for Colorado.”

But first, Chen has to placate the neighborhood, which he was astonished to find perched so close to his industrially zoned site.

“Whoever approved that development, to have so many residents right next to it, to me, it’s a little bit appalling,” he says.

Homes south of the Intel complex were built in the late 1990s, a couple of years after the industrial area took shape.

City spokesperson Kim Melchor says Chen’s operation didn’t prompt the city to revisit allowed uses, because the existing development plan illustrates the general use of the building as industrial.

“In situations of a change of use or exterior modification,” she says via email, “a development plan would be required prior to construction and the development plan review criteria would be reviewed and addressed.”

When Chen started up the plant in October, a few neighbors filed complaints with the city. Code enforcement officers went to the neighborhood, records show, and measured the noise at less than the 55-decibel daytime limit (7 a.m. to 7 p.m.), which a Purdue University study describes as between conversation at home and conversation in a restaurant.

“No violation; case closed,” officers wrote.

More complaints streamed in during subsequent months, but the city found the operation was within allowable limits. Residents argued the plant at times exceeded the daytime limit, and far overshot the nighttime limit of 50 decibels (7 p.m. to 7 a.m.). At least three residents bought their own decibel meters when the noise trouble arose.

But the city says it can’t take action based on unofficial readings metered by residents.

As recapped by Mitch Hammes, Neighborhood Services manager who oversees code enforcement, in a March 18 email to city officials, “I have confirmed with the City Prosecutor that in order to bring criminal charges, code enforcement MUST observe the noise and take our own noise meter readings.”

Turns out, Hammes sent Ron Graham-Becker, a neighbor who has become the de facto neighborhood point person, an email on Nov. 19, 2018. In it, he provided his cell phone number and said Graham-Becker could call “24/7/365” so the city could obtain official readings.

Graham-Becker tells the Indy he called Hammes in the wee hours a couple of times and never heard back, so he didn’t try again. He also says city code officers told him his meter readings constituted acceptable evidence.

It’s not clear why the city code officers didn’t take meter readings at night on their own, given that neighbors made it clear the humming sound continues unabated around the clock.

Graham-Becker has charted the decibel readings daily since March using his own meter, which he says reads nearly the same as a code officer’s device.

His findings: The plant exceeded the daytime residential limit 59 percent of the time and surpassed the nighttime limit almost every night from March 19 through May 1.

After he and others contacted City Councilor Knight, Knight met with Chen, whom he describes as “very proactive in wanting to be a good neighbor.”

Although Knight cannot officially negotiate a resolution, he and Chen agreed that Chen would try to fix the problem within 90 days, which began March 22.

Since then, Chen has built an insulated awning over the building and added a wooden box lined with carpet next to it. Neither impacted the sound. In fact, neighbors say as the spring and summer approach, the noise has intensified.

click to enlarge Residents’ view of the plant from their backyards. - PAM ZUBECK
  • Pam Zubeck
  • Residents’ view of the plant from their backyards.

Neighbors say the city seemed unprepared or unwilling to deal with their complaints.

“It’s like nobody knows the code,” resident Chad Skinner, who’s lived in the neighborhood for 19 years, tells the Indy. “Even if they do know the code, it’s like, ‘Well, he’s working on it.’ Everybody seems to be pushing it off, pushing it off, pushing it off, and nobody wants to tackle it for some reason.”

Intel, Skinner says, caused noise at times, but not constantly day and night. The company also reached out to keep neighbors informed. When it anticipated a short-lived blast would occur, Intel offered neighbors movie tickets so they could escape during that time, he says.

But 3G’s noise is worse, because it never ends. Now, when his grandchildren visit every other week, Skinner says, “We don’t let them play in the backyard anymore. We take them somewhere else now.”

Another 19-year-resident, Eric Stegall, describes his life after 3G moved in as “misery 24/7.”

“There’s nowhere I can go in my home, even the basement, where it doesn’t impact me,” says Stegall. “You have to sleep with earphones. Ear plugs aren’t enough. You have to have something going on like music [on the headphones]. It’s not just what you can hear. It’s what you can feel. It’s pressurizing the room.”

Stegall questions why the city hasn’t cited Chen.

“What he needs to do is turn the dang thing off until he fixes it,” he says. “I don’t understand why we’re allowing him to run it. It’s pollution. If it was billowing smoke, we wouldn’t let him run it.”

Stegall, an acoustic engineer, says it appears Chen is “sort of winging it” in trying to subdue the sound. A so-called sound shield on the roof-top fans that Chen hoped would dampen the noise actually made it worse, because it acted as a “band shell  reflector” that projected the sound farther, Stegall says.

Stegall also notes code enforcement didn’t return his phone call when he tried to file a complaint, and his voicemail to Knight was forwarded to Graham-Becker, by far the most vocal neighbor.

“I don’t really feel like they’re addressing it at all,” Stegall says, referring to the city.

In emails to Chen, the city’s tone has been decidedly cordial. For example, in a March 1 email code enforcement officer Tom Wasinger wrote, “Anything you can do to reduce the noise levels would be greatly appreciated.”

But Stegall is thankful that Chen, when asked by neighbors, turned off the industrial fans on Mother’s Day, to allow for backyard enjoyment.

“People were saying it was eerily quiet,” he says.

The noise, though, returned the next day, and several residents, including the Armstrongs, are considering selling and moving out. “It’s that bad,” Eileen Armstrong says.

“I don’t think they care about the cost to anyone else,” she says. “They need some policies to help neighborhoods, or they’re going to slum us out.”

Moreover, Armstrong doesn’t see any advantage of having 3G here. The operation has added 10 employees, according to Chen, and it’s unclear what, if any, sales taxes 3G pays. Its annual city property tax bill is $9,222.

Though residents at first were happy Chen promised a fix, Graham-Becker now sees those promises as stall tactics.

In a May 5 email to Knight, he urged the city to cite Chen and shut down 3G until it complies with the noise ordinance. He also wants the city to review Chen’s latest mitigation plan for its efficacy.

“It never ends, it doesn’t go away and it’s illegal,” he wrote. “The residents want their privacy, peace of mind, and their lives back. We are all at our wits’ end.”

If the city has given Chen the benefit of the doubt, it’s likely because that’s ostensibly the city’s policy. Records show the city’s Neighborhood Services hasn’t issued a single noise citation in the last 17 months.

“In all of our code enforcement cases we strive for voluntary compliance over just responding and issuing tickets or criminal charges,” Hammes, the code enforcement chief, wrote in the March 18 email to other officials.

As Knight tells the Indy, “It’s only common decency to give them a period of time to correct that issue.”

Asked what he would tell the neighbors about the months-long delay in 3G reaching compliance, he says, “If I were in their shoes, and I knew there was light at the end of the tunnel, I think I could live with that.”

That so-called light, Chen says, has cost him $500,000 and includes lower-decibel exhaust fans, due for arrival on June 3, and a series of shipping containers he’ll stack 20 feet high next to the Bitcoin building. If that doesn’t muffle the sound enough, he says, he’ll pile giant bales of straw on top of the containers.

“The bottom line is, you’ve got to block the sound and absorb the sound,” he says. “Finally I’m getting better educated. I’m getting a handle on the exact science on how it works.”

It’s unclear if Chen will meet the deadline for compliance, however, because changing fans requires city approval, and Chen notes that he can’t control the city’s timeline for that.

click to enlarge feature1-3.jpg

Knight says he asked the city in mid-May to issue a notice of violation to Chen, which could lead to fines if the plant fails to comply by the scheduled June 21 inspection. That notice states a reading of 56 decibels was taken on May 13 at 8 p.m., which is 6 decibels over the limit.

The notice also sought a compliance plan, which city spokesperson Melchor says was submitted on May 21.

If the plant flunks the inspection, Melchor says, a summons could be issued, which could lead to fines of up to $2,500, but “would be up to a judge to determine.”

By now, even Knight has grown skeptical the problem will be fixed. “Now after 60 days,” he says, “logically you would expect to see some improvement, and they’re not seeing anything. The stuff he’s done has shown zero improvement. Now that the [previous] plan is not working we’re upping the tempo.”

In retrospect, Knight acknowledges the city could have handled the entire situation better, though that shouldn’t prevent the city from welcoming more cryptocurrency mining to the city, he says, because they bring jobs and revenue via power sales by Utilities.

But, he warns, “If we turn around and let them go into a neighborhood without sound attenuation ahead of time, shame on us. This is something that we need to really take stock of and learn our lesson.”

For example, he says, the city could have done a better job of researching the property’s use beforehand and considered requiring a noise abatement plan up front.

Of course, the whole episode isn’t over for the neighbors. If Chen’s next fix doesn’t work, the city’s noise ordinance allows him to seek a waiver of the noise limit.

Applications for relief from the noise level imposed by the ordinance are to be made to Mayor John Suthers, who can impose conditions or grant relief if it’s found that:

More time is needed to modify the operation to comply.

The activity is temporary and simply can’t comply with the ordinance.

The applicant has no other “reasonable alternative.”

Knight opposes a waiver and sides with the neighbors.

“I don’t care how much power we’re selling him,” he says, “the neighbors were there first. These are my constituents. I share their frustration.”

What’s Bitcoin, anyway

By Helen Robinson, Colorado Springs Business Journal

Bitcoin, an electronic currency, was released in January 2009. At the time, Satoshi Nakamoto (the pseudonym used by the unknown person or people who designed Bitcoin) described it as a new electronic cash system that’s completely decentralized with no central authority or trusted parties, “because everything is based on crypto proof instead of trust.”

Bitcoin — like other cryptocurrencies — cuts out that central authority (like a bank) by sharing the currency’s management among a massive network of users.

The founder(s) limited the Bitcoin supply to 21 million, of which about 17 million have already been “unlocked,” or released into circulation by “miners” who help keep the system running. The labor of Bitcoin mining is handled by computers tasked with solving labyrinthine algorithms whose degree of difficulty shifts over time.

Mining is a notoriously energy-hungry process, sucking up vast amounts of computational power requiring enormous amounts of electricity. To turn a profit, Bitcoin miners need to invest heavily in storage and powerful computers — sometimes thousands of them — which generate heat along with hoped-for profits. A “mining farm” — a room or warehouse dedicated to mining cryptocurrencies — requires huge, numerous and sometimes very noisy cooling systems to offset that heat.

Last year, the Franklin Institute called Bitcoin the “dark horse” on the world’s list of environmental concerns. “The sheer amount of electricity used by the Bitcoin network is staggering: at the time of this writing, the estimated amount is 48.8 terawatt hours (TWh) per year, and climbing every day,” it said. “Based on recent estimates, that consumption outranks the electricity usage of entire nations, including New Zealand, Peru and Iraq.”

What’s happened elsewhere with Bitcoin mining noise

Cryptocurrency mining has encountered a backlash elsewhere due to noise and excessive energy use. A sample:

Bonner, Montana. A cryptocurrency data center drew noise complaints from neighbors, with one describing the sound as “a brain-drilling jet engine coming through the roof,” Missoulian.com reports. After running for about a year, the company, in mid-July 2018, changed the blades of its 144 exhaust fans, which reduced the noise by 50 to 75 percent. The company, Hyperblock, hopes to expand to 55,000 servers from 13,000. 

Virginia Beach, Virginia. A Bitcoin mining plant said to be one of the biggest in the world triggered a barrage of noise complaints from neighbors due to its 90 roof fans, wavy.com reports. The owner of Bcause LLC said he planned to build a sound barrier after the plant grows to 33,000 computers, but gave no anticipated date for that milestone.

Plattsburgh, New York. In March 2018, the town of 20,000 imposed an 18-month moratorium on new cryptocurrency mining operations in efforts to preserve natural resources, Bloomberg News reported. The problem stemmed from higher power usage that drove up residents’ bills due to how the city’s power supplier structured supply costs. But the hiatus ended a year later, WAMC.org reports, after the town renegotiated its power supply. Late last year, Plattsburgh adopted a new special permit for mining that limits sound to 90 decibels at a distance of 25 feet, bitcoinist.com reports.

Ephrata, Washington. In October 2018, City Council imposed a one-year ban on new cryptocurrency mining facilities. Councilors cited noise and huge power usage, according to the The Spokesman-Review.

Oslo, Norway. Kryptovault uses 40 megawatts of power to run 9,500 computers. Residents complained about the sound from fans, which one resident said had “ruined” summer. The company invested in noise-reduction equipment to reduce the sound from 60 to 45 decibels. The plant received a bomb threat after a deluge of noise complaints and town leaders threatened to close the plant, according to BlockTribune.com. The outcome of that 2018 debate isn’t mentioned in media reports, and Kryptovault didn’t respond to an Indy inquiry by press time. 

— Compiled by Pam Zubeck

What the law says about noise pollution

The city’s noise pollution ordinance declares it unlawful to “make, create, or permit an excessive or unusually loud noise, or a noise which endangers public safety, or a noise which is harmful to any person...”

The ordinance states the minimum fine for a first offense is $75, second offense, $150, and $300 for the third and subsequent offenses. The maximum fine is $500. However, city spokesperson Kim Melchor says a judge is empowered to set the fine at $2,500.

For residential areas the maximum decibel rating allowed from 7 a.m. to 7 p.m. is 55, while the maximum from 7 p.m. to 7 a.m. is 50.

While the 3G Venture II LLC Bitcoin mining plant is in an industrial zone, which is allowed 80 decibels during the day and 75 at night, the ordinance contains a provision for “adjacent zones.” When a noise can be measured from more than one zone, “the permissible sound level of the more restrictive zone shall govern,” it says.

The ordinance also allows an applicant to seek a permit, or waiver, from compliance with the ordinance. Such permits, which can include conditions, are issued by the mayor’s office.

A Purdue University study, which compiled data from several sources, gives these examples of decibel ratings.

150: A jet taking off; could rupture eardrums.
120: A thunderclap or chainsaw; painful (32 times as loud as 70 decibels).
90: A 737 aircraft just before landing, power mower, motorcycle at 25 feet away, or a newspaper press; likely hearing damage after 8-hour exposure.
60: Conversation in a restaurant or office, air conditioning unit at 100 feet away (half as loud as 70 decibels).
50: Quiet suburb, conversation at home.

In reporting this story, the Indy submitted several requests under the Colorado Open Records Act.

Most information was provided free of charge. However, for a set of documents, totaling 658 pages, the city charged $60.

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