A data centre proposed for the foot of the Clyde Dam has been approved after being granted resource consent, opening the door for cryptocurrency mining in Central Otago.

In a decision released last week, hearings commissioner Bob Nixon concluded Contact Energy’s application for a 0.65 ha two-lot subdivision, and land use consent for the construction of a data centre and associated facilities at 46 Fruitgrowers Rd, Earnscleugh, be approved.

The approval comes subject to standard regulatory and building conditions regarding subdivision, services and land use.

The decision will do little to appease critics who say the data centre will will be of no benefit to Central Otago wider New Zealand.

In his decision, Mr Nixon considered evidence presented at a hearing on February 18.

In evidence presented at the hearing, Landpro planner Matt Curran said the proposal was for the construction of eight containerised data centres, associated facilities and a noise mitigation wall along the eastern and southern boundaries of the site.

The containers would each hold 368 servers.

The proposal also included vehicle access, car parks, loading space and landscaping around the perimeter.

At the time the application was lodged, a notice of requirement was issued by Aurora Energy for a substation beside the data centre to provide it with a direct connection to the local distribution network and for a new supply for Clyde from 2025.

The data centre would be operated by a separate entity, Lake Parime, under a lease with Contact.

Lake Parime is a privately owned UK digital infrastructure company connected to renewable energy sources for machine learning, modelling, data visualisations, with a particular focus on blockchain and cryptocurrency mining.

No staff would be permanently based on the site but Lake Parime would employ a few maintenance staff to manage the servers.

Contact Energy head of hydro generation Boyd Brinsdon said in evidence the site was selected because its proximity to the Clyde power station reduced transmission and distribution losses.

In 2018, data centres internationally consumed about 1% of globally generated electricity, and demand was expected to substantially increase in the next decade.

New Zealand was attractive due to its mostly renewable electricity generation.

He explained Lake Parime was entering into a commercial relationship with Contact Energy for the supply of up to 10MW of electricity.

The data centre would operate when electricity demand was low and scale back when demand was high.

Data processing was not part of Contact Energy’s core business, but it would continue to hold the resource consents in its name as applicant to ensure the data centre operated within the environmental parameters required by its resource consents, Mr Brinsdon said.

Three submissions opposing the application due to concerns about noise were considered but none of the submitters spoke.