Bitcoin mining operation in Electric City could face higher electricity rates

In the face of requests for power that total more than three times what they typically sell, Grant County PUD is considering raising electricity rates for "evolving industries" that suck up a lot of power, such as bitcoin mining operations.

Atlas Blockchain Group Inc, formerly Atlas Cloud, is a Canada-based company that purchased the former Young's Welding building in Electric City to house such a facility, a decision made to take advantage of Grant County PUD's low electricity rates.

Blockchain is a technology that, according to the company's website, enables "users to send money directly and safely from point to point, without going through a bank, a credit card company, or PayPal. Bitcoin or other digital currency isn't saved in a file somewhere; it's represented by transactions recorded in a blockchain - kind of like a global spreadsheet or ledger, which leverages the resources of a large peer-to-peer Bitcoin network to verify and approve each Bitcoin transaction. Rather than the internet of information, it's the internet of value, or the internet of money."

"Our staff has proposed adding a new rate class for Evolving Industries for industrial sectors having risk profiles that could be detrimental to Grant PUD's other customers," said Chuck Allen, public affairs supervisor for Grant PUD.

Such "risk profiles" include the likelihood of government regulation, volatile market conditions, lack of a proven track record and high concentration of similar customers in the county.

"Because of these risk profiles and Grant PUD's costs to serve these customers, our staff is proposing rates that are almost three times what they would be paying now," Allen said Monday.

Currently, the rate for such utility customers is $0.03 per kilowatt hour, and the PUD is considering rates closer to $0.13, or $0.07, depending on energy usage, for these industries. The computers used by the Bitcoin industry to "mine" Bitcoin use so much power that without a change in their rates, that added draw on the PUD's available electricity could cause rates to rise for residential, irrigation, and small business customers.

"The new rate is the result of six months of Grant PUD analysis into how to handle an unprecedented 2,000 megawatts of inquiries for new power hookups," a July 10 Grant PUD Commissioners meeting recap states. "Two thousand megawatts of power is nearly three times Grant PUD's average county-wide load of 590 megawatts. It's enough to power some 900,000 Grant County homes."

Some 1,500 of those 2,000 megawatts of inquiries are from cryptocurrency businesses.

"We are also proposing to recover more of our up-front costs to provide them and other large-load customers a connection to our power system," Allen said. "They are also considering exempting Evolving Industries customers from the added protection of board policy, which declares that our residential, irrigation and small business customers will be the first in line for access to low-cost power benefits from the Priest Rapids Project if we have to bring in additional power resources to meet demand in the county. The Evolving Industries customers would not have this benefit."

"Our commissioners have spent the past three commission meetings listening to staff recommendations, hearing from both cryptocurrency operators and members of the public with similar concerns," Allen noted.

Atlas Blockchain Group Chief Operating Officer Fred Stearman said Thursday that raising the rates would "force everybody out." With a higher electricity rate, the businesses would no longer be profitable because of the large amount of electricity used by the electronic servers used to mine bitcoins and other cryptocurrencies.

PUD Commission President Terry Brewer called for options at the July 10 meeting. "There's nothing in the world I hate to see more than people losing jobs," he said. "We've heard from some of the people who work at these businesses - they're good jobs. I think we need to find an accommodation and work with them."He agreed that none of these new businesses, existing or prospective, should pay below the cost to provide their electricity. "Cryptocurrency companies use industrial amounts of electricity," the commissioners meeting recap continued. "Grant PUD's rate policy says industrial customer groups will pay above-cost rates to help subsidize the below-cost of rates of 'core' customer groups - residential, irrigation and small and medium-sized business."

Cryptocurrency firms are often highly mobile and agile enough to quickly relocate if they find cheaper electricity elsewhere or shut down altogether if the price of their cryptocurrency falls too low. This makes it riskier for utilities to invest in costly, higher capacity power lines and substations to serve them.

Allen said the commissioners would meet at a public workshop on Tuesday, and that no action would be taken concerning the rates until Aug. 14, at the earliest.

"We have about 25 megawatts of power being used in Grant County for cryptocurrency mining right now, by about a dozen companies," Allen said, adding that the PUD is waiting to process the 1,500 megawatts requested by cryptocurrency companies until a decision is made on the rates.

Stearman said the increased rates would change Atlas Blockchain Group's decision to move here, where they've already spent money purchasing and renovating their building. "We wouldn't open up there, wouldn't hire any people," Stearman said. "It's a paradox. It's discrimination against the industry. There could be a class-action lawsuit against the PUD."

The company's website states that they are investing $2.3 million USD into the renovation of the Electric City building they purchased for $300,000.