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What to know about data centers in Pend Oreille County
NEWPORT — Ask Newport residents what they think of artificial intelligence data centers coming to their county, and you’ll receive mixed responses.
Energy and water use at these facilities will drive rates up. The tax revenue generated can fund much-needed jobs at local businesses and schools. We’ve had a data center here for years already. (Merkle Standard, the cryptocurrency mining facility in Usk that many residents are familiar with, is only now making the transition to AI work.)
Meanwhile, construction continues at a Newport site soon to host one of the first AI data centers in Pend Oreille County. This site is owned by Krambu, a company based in Coeur d’Alene that aims to design, build and operate high-performance AI data centers.
“It’s still a huge learning experience for us, most definitely, and I think for the whole state,” said Jim McCroskey, Pend Oreille County assessor. “‘Cause this is all fairly new.”
The term “data center” is widely used today in reference to those training and powering AI models, such as ChatGPT, Meta AI and X’s Grok. However, data centers predate AI by several years, said former Krambu CEO Steve Wood.
Wood, who has also worked for Merkle Standard and Ponderay Newsprint, defined a data center as a structure that contains high-performance computing. These computers or servers run programs, perform algorithms and store data, depending on the needs of clients. The computers in cryptocurrency mining facilities, for example, verify the blockchain, ledger and transactions.
“For Google Maps, when you plug into your phone you wanna go somewhere, that happens ultimately running on a data center or something,” Wood said.
As AI data centers spread across the globe, raising widespread concerns about community liveability and environmental sustainability, The Miner has identified four in Pend Oreille County: Merkle Standard, Krambu and two by the intersection of Highway 2 and Telephone Road East that were recently sold to Allrise Capital, parent company to Merkle Standard and Ponderay Industries.
Krambu
In Newport and other areas of the Pacific Northwest, Krambu promises to operate AI data centers while working with the community.
The Newport site, about 1 acre in size and under construction since this spring, will host a data center with a computer network comprising 72 servers. Krambu is spending more than $2 million on the site, even purchasing and demolishing Newport Pawn’s former location on Union Avenue. (Newport Pawn has since relocated to another Union Avenue address, 317 S. Union Ave.) The three lots run from Highway 2 to Pine Street.
“You start thinking about sovereign issues and geopolitical issues that ultimately, we do need these data centers,” Wood said. “But they just need to be built and designed in a way that harmonizes with local communities.”
To that end, the Newport site will utilize a closed-loop water system to cool its computer network and attempt to recapture most of the heat for other purposes.
The closed-loop water system allows Krambu to use less water than other data centers, as only about 500 gallons of water will be used to fill the system. Travis Jank, Krambu founder and president, previously told The Miner that the company’s target is net zero water consumption. (Jank did not respond to multiple attempts by The Miner to contact him for comment on this story.)
“Those that are really stewards of the environment and concerned about it, they’re looking for ways to use less water,” Wood said.
On the other hand, Krambu has requested an electrical load upgrade from the Pend Oreille Public Utility District, wrote public information officer Joe Hathaway in an email. After approval from the PUD Board of Commissioners at their Aug. 4 meeting, Krambu is now classified as a large industrial customer and has signed an Electric Service Agreement contract with the PUD. That makes Krambu the second large industrial customer in the county, the first being Merkle Standard.
Under PUD policy, any customer with an average load greater than 2 megawatts is placed in the large industrial customer class. The 72-node cluster of computers at Krambu will require 1 megawatt of power to start.
Large industrial customers purchase their power on the wholesale market rather than from the PUD’s lower-cost resources from Boundary Dam, which is reserved for residential and small-business customers, Hathaway wrote. They pay the actual cost rather than a rate for electricity, and if they desire additional infrastructure, they pay those costs as well.
“Because their supply is separate, large industrial customers’ power usage does not impact residential electric rates,” Hathaway wrote.
Normally, the heat from the computers at the Newport site would just get sucked up into the air. By recapturing most of that heat, Krambu can support on-site hydroponic or aquaponic production, growing fresh food, vegetables and protein such as fish. These resources could in turn be donated to community food banks, Wood said.
Krambu plans to set up a prototype greenhouse by October, anticipating as many as a dozen full-time greenhouse employees. There are at least that many contractors working on construction now, including engineers.
Potentially, Wood said, Krambu can even repurpose the heat to warm sidewalks or a community pool.
Merkle Standard
After mining cryptocurrency for almost five years since its conversion from a paper mill to a data center, Merkle Standard is transitioning to AI work.
Since data center operations began in late 2021, Merkle Standard has operated several types of computers, including a large cluster of both general-purpose and application-specific integrated circuit (ASIC) computers.
“As an established data center business, we will continue these operations going forward,” Merkle Standard officials wrote in an email.
With computers becoming increasingly dense, data centers must establish proper cooling systems for AI work, Wood said. He posited that Merkle Standard could tie Ponderay Newsprint’s water treatment system into direct liquid cooling for the facility.
Merkle Standard may also have to increase and improve the fiber directed to the site, install an improved water filtration system, refit pipes for the cooling system and find back-up power, Wood said. Additionally, there are cybersecurity and software needs.
“Even in Bitcoin mining, you’re gonna have to spend millions of dollars per megawatt to get the infrastructure ready for these newer-generation computers,” Wood said.
For power, Merkle Standard uses 40–50 megawatts of electricity.
Like Krambu, Merkle Standard is a large industrial customer that purchases power on the wholesale market under an ESA with the PUD, Hathaway wrote. Merkle Standard’s power usage varies month-to-month and is determined by the amount it purchases. They too do not take service from the PUD’s lower- cost Boundary resources.
“Merkle Standard pre-pays for and covers the full cost of these market purchases,” Hathaway wrote. “This ensures that their purchases do not affect other ratepayers.”
As its sister company, Merkle Standard is one of many users of Ponderay Industries’ water system. Officials wrote that Merkle Standard uses “an allowable and variable amount of water,” as Ponderay Newsprint did while still in operation. Merkle Standard and all other users operate within long-established water rights and water system monitoring by the Washington State Departments of Ecology and Health.
Ponderay Industries maintains Merkle Standard’s part of this system at no cost to other users, officials wrote. Almost a dozen notable users utilize the Ponderay Industries water intake system, all for free.
“It’s important to recognize that maintenance and operations of this vital part of the mid-county water system is funded and operated exclusively by revenue from the Merkle Standard data center, and investments made by Allrise Capital,” officials wrote.
Merkle Standard contains one of the first deployments in the country of hydrocooled cryptocurrency miners — a closed-loop water system for cryptocurrency mining, Wood said. This system was successful, though efforts to set up a greenhouse at Merkle Standard in partnership with Washington State University ended in failure.
“That was really leading-edge for hydrocooled Bitcoin miners,” Wood said.
Moreover, Merkle Standard has made both direct and indirect contributions to the community, officials wrote.
Merkle Standard pays hundreds of thousands of dollars annually in property taxes, including more than $640,000 in 2025, over $400,000 of which benefited the hospital district, schools, fire districts and roads. Over the years, Merkle Standard has donated hundreds of thousands of dollars to schools, youth sports, local events, fire districts, granges and veterans organizations.
Merkle Standard itself provides 30 full-time jobs on-site, officials wrote, most of whom are employees with a few contracted services.
“Another, more notable impact (and often overlooked) is the positive impact we have on the local power supply,” officials wrote.
Merkle Standard provides grid stability and power access to the PUD, something officials attribute to their ESA and strong working relationship with PUD staff.
During the January 2024 polar vortex, residents’ electric lights and heaters were powered by energy pre-purchased by Merkle Standard, saving ratepayers over $900,000. Because Merkle Standard pre-purchases power from the wholesale market, it can then return that power to the PUD during similarly extreme conditions, when the PUD is short of power supply. Data center operations may be reduced in the process.
When the PUD has extra power, they can sell it to Merkle Standard with the ability to recall it should the general service load increase, officials wrote.
32 and 100 Telephone Road LLCs
Despite 32 and 100 Telephone Rd. E. hosting the oldest remaining data centers in Pend Oreille County, little is known about them.
Both properties were purchased in 2018 to serve as the sites for cryptocurrency mining facilities. The 100 Telephone Rd. E. property was purchased by members of the Alwine family, then sold in 2023 when the facility there reached end-of-life, former co-owner Josh Alwine said. Across the road, the 32 Telephone Rd. E. property was purchased by an unknown party and sold in 2021.
Currently, both properties are owned by LLCs created by Allrise Capital, parent company to Merkle Standard and Ponderay Industries. Allrise is based in Irvine, California.
“I know they just bought [100 Telephone Rd. E.] for the power infrastructure,” Alwine said.
That infrastructure included the Alwines’ contract with the PUD and the existing transformers, switch gear and other equipment at the facility. The data center was designed per its proximity to the PUD and nearest substation, which is less than 1 mile away.
Unlike Krambu or Merkle Standard, these facilities are classified as standard industrial customers, meaning they each use less than 2 megawatts. Under the PUD’s Electric Services, Rates and Credit Policy, standard industrial customers pay a rate of $0.0436 per kilowatt-hour of electricity.
McCroskey confirmed that, as of January, both data centers appeared to still be mining cryptocurrency. The sites also operate general-purpose and ASIC computers, according to Merkle Standard. Officials would not comment further on Allrise’s plans for either property.
“The same focus on community economic benefits and a local collaborative approach is used for managing these locations,” officials wrote.
