Standing in the middle of Cryptomate’s computer room, the deafening sound of fans makes it hard to hear.
This is what the centre of cryptocurrency mining looks like.
Racks of computers whirr away while industrial strength fans keep the computers from overheating.
From a discreet location on the waterfront, Cryptomate husband and wife co-founders Hamish Shoae and Sepie Sharif build and maintain computer arrays specifically designed to mine cryptocurrency.
Cryptocurrency mining is the process of solving computer equations to produce blocks which protect the network from cyberattacks.
Cryptomate built and sold hardware for crypto mining and it also provided a hosting service on behalf of owners of cryptocurrency mining units.
Mr Shoae said cooler temperatures in Otago and Southland made the region ideal for hosting services.
"If you set up a hosting service in Auckland it is hot, it is too hot."
"You would have to spend a lot of energy to keep it cool."
Instead their computer room in Dunedin generally did not require air conditioning.
"A normal fan and natural air circulation makes it cool."
Hardware costs were between $11,000 to $15,000
Annual service costs were between about $2500 to $4000.
The crypto currency market was very volatile but it could be possible to pay off the investment in the first year, and after that all the profits from mining came to the owner.
"Cryptocurrency is extremely, extremely volatile," Mr Shoae said.
At the moment the whole cryptocurrency market was down on previous highs.
"What I tell people is to have a long-term view, that is very important."
The machines were like a hen laying an egg.
"It produces, it lays an egg every day," Mr Shoae said.
The key to whether it was a golden egg came down to the changing value of the cryptocurrency coin that was being mined.
Criticism of cryptocurrency mining often focused on the electricity required to run the machines.
Mr Shoae said the majority of energy for Dunedin came from the Clyde dam.
"It is renewable green energy."
This meant New Zealand was particularly well positioned to operate cryptocurrency mining.
"There is infrastructure in the Otago region to actually create a hosting centre — it is cold and there is lots of renewable energy."
Massey University sustainable energy and climate mitigation Professor Emeritus Ralph Sims said a company anywhere in New Zealand using the national electricity grid would have a carbon footprint only about a quarter in size what it would if it was operating in countries such as China, the United States or Australia, where coal-fired power dominated.
New Zealand electricity had more renewable generation (about 80%) on average than most countries.
The question is whether our electricity system will be able to meet growing electricity demand, for example that of electric vehicles, if data centres and other high power using operations were built.
"Part of the dilemma is whether the Rio Tinto smelter will actually close as planned in 2024. If it does, then around 12% of our total electricity generation will become available for other major users."
With the smelter’s majority owner Rio Tinto announcing last week that it aimed to keep operating past 2024, that was now looking unlikely, Prof Sims said.
