Data Center, Bitcoin | Lost 55 million on bitcoin adventures – now the operation is threatened

NAMSSKOGAN/RØYRVIK (NT24): The accounts for the data center in Namsskogan reveal a deficit of 55 million – and that the main business is mining the cryptocurrency Bitcoin.

The energy minister, who is visiting Namdalen on Monday, wants to put an end to that.

Namsskogan municipality collects millions of kroner in compensation for the sale of electricity to the company Exanorth AS. They operate 8,500 computers and 300 servers in a long row of containers, in the middle of the forest a couple of kilometers from the E6 at Kjelmoen in Namsskogan.

Now crisis-stricken Røyrvik will also have an agreement with Exanorth to have containers filled with computers that can eat up the surplus of licensing power in the municipality.

Neither the municipalities nor the operators of Exanorth have wanted to answer clearly whether the computers and servers are used for mining cryptocurrency, and have called it a center for data storage. But in the accounts for the company, which NT24 has seen, it is stated that it is the extraction of digital currency – or so-called cryptocurrency, which is the assignment from the main customer.

Will close the door to crypto mining in Norway

Now the government is announcing that it will introduce a new law that forces the operators and owners of data centers to disclose what the computers are used for. The intention is that data centers and Norwegian power production should not be used for cryptocurrency mining.

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– This is incredibly important. It is very important to get a good overview of which services are offered in these data centres. it is the societally useful data centers we want, said Energy Minister Terje Aasland to VG two weeks ago.

– The purpose is to regulate the industry in such a way that we can close the door on the projects we do not want, said digitization minister Karianne Tung.

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Canceled crypto visit

On Monday, Energy Minister Terje Aasland is in Harran in Grong municipality and stands for the official opening of the newly renovated Nedre Fiskumfoss power station.

On the same day, municipal minister Erling Sande will meet Røyrvik mayor Kennet Tømmermo Reitan. On Tuesday, they were scheduled to visit the data center in Namsskogan, together with general manager Frank Arild Aadnevik of Exanorth AS. That meeting has now been cancelled.

The data center in Namsskogan is operated by the company Exanorth AS, which recently submitted its annual accounts for 2022. This only happened after the company received notice of compulsory dissolution due to a lack of submitted accounts.

Dramatic deficit

According to Exanorth’s annual accounts, there have been major changes from the previous year. The income has increased from zero to 124 million, but at the same time they have increased the debt item, which now stands at 502 million. Overall, the deficit is 55 million.

The company reports that their biggest customer is sister company Bitzero Ink in Barbados. That company advertises with extensive experience in Bitcoin mining and data processing.

Namsskogan municipality earns around 12 million a year from selling approximately 60 per cent of the municipality’s licensing power to the data center in Tunnsjødalen. The data center with a deficit of 55 million, on the other hand, does not leave a single krone in the state coffers in the form of tax payments.

Consultant’s fee to own company of DKK 8 million.

Exanorth is wholly owned by the Canadian company Bitzero Blockchain Ink, and has a debt to the owners on the other side of the Atlantic of over NOK 460 million. The main share of the debt is to the owners. There is also an expense item of over eight million in consulting fees for the company Exakraft, a company in which managing director Frank Arild Aadnevik has a 45 percent stake.

Previously, the company informed NT24 that the production at Tunnsjødalen is about data storage.

– This is what people call “storage in the cloud”, said operations manager Marius Dille in Exanorth in Namsskogan, in February this year. In an interview with Trønder-Avisa after the bill from the government became known, Dille said that they are supplementing the operating budget with cryptocurrency mining. He claims that he does not know if any of the customers rent space in the data center to mine cryptocurrency.

– It is classified information, according to Dille.

Data to heaven: Exanorth is in full operation in Tunnsjødalen

But in the annual accounts it is clear that the data center in Namsskogan extracts digital currency, or “mining of digital currency” as it says.

They do this for their biggest customer, which is the sister company Bitzero Inc in Barbados.

NT24 has made repeated attempts to get in touch with the general manager of the company, Frank Arild Aadnevik, without success.

During 2022, he had an income of over 23 million, a fortune of over 40 million, and paid over eight million in taxes. This means that he earned approximately twice as much as the company he runs left in income for the entire Namsskogan municipality, despite the loss of 55 million.

High power consumption

Not only is Bitzero Inc listed as the company’s largest customer, but Exanorth states that the company’s future operations depend on Bitzero paying the company’s largest expense item: Electricity.

The data center in Namsskogan buys around 27 GWh annually from Namsskogan municipality, which is enough energy for a construction site of over 1,000 residential buildings. Namsskogan municipality has a population of 810 people according to figures from Statistics Norway per the fourth quarter of 2023. Exanorth’s electricity bill is around NOK 1 million a month.

At the same time that Namsskogan gets to sell the licensed power locally, the rest of both Trøndelag and Norway are heading towards a power deficit as early as 2028, if they want to meet the climate targets.

Now Røyrvik municipality is also considering getting on the crypto train in anticipation of a possible new mining operation.

Want to avoid “Robek” with Bitcoin mining

The neighboring municipality of Røryvik had an additional consumption of ten million in 2023, which can send them in on Mayor Kennet Tømmermo Reitan previously stated to Trønder-Avisa that the municipality could have avoided the deficit if they had again obtained a license for the power, as Namsskogan municipality did in 2023.

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– If we had been allowed to keep the rightful license fee ourselves, we would have had NOK 15 million in additional income in 2023. Then we could have set aside NOK five million in a fund, he says.

Uncertain about future operations

Recently, it became known that the company MH Technology AS, which tried to establish itself with crypto mining at Åsen in Levanger municipality, had a deficit of 585,000 kroner, out of a turnover of well over 2.6 million kroner. They withdrew from the municipality after a neighbor conflict. High electricity prices and tough competition with crypto miners from the US and China were the cause of the deficit.

Even before the announced austerity from the government, the company Exanorth itself is unsure whether there is a basis for continued operation. Overall, the company starts with the following questions in the annual accounts:

Is there uncertainty about continued operations?

– Yes, it says in the annual accounts.

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