Bitcoin backlash as ‘miners’ suck up electricity, stress power grids in Central Washington

[Zippyjuan]

https://www.seattletimes.com/busines...al-washington/

Public hearings for rural electric utilities are rarely sellout events. But the crowd that showed up in Wenatchee two weeks ago for a hearing about Bitcoin mining in Chelan County was so large that utility staff had to open a second room with a video feed for the overflow.

The turnout wasn’t surprising. Chelan County, along with neighboring Douglas and Grant counties, has been at the center of the U.S. Bitcoin boom since 2012, when the region’s ultracheap hydropower began attracting cryptocurrency “miners.”

These entrepreneurs earn Bitcoin by solving increasingly complicated mathematical problems established by the shadowy creators of the digital currency. The process, which the industry calls mining, involves trillions of computer calculations and sucks up huge amounts of power.

As a result, an area famous for apples, wheat and conservative politics has been transformed into a kind of cyber-boomtown, with Bitcoin mining operations that range from large-scale, state-of-the-art warehouses to repurposed cargo containers to backyard sheds. By the end of this year, according to some estimates, the Mid-Columbia Basin could account for as much as 30 percent of the global output of new Bitcoin and large shares of other digital currencies, such as Litecoin and Ethereum.

But as in any boomtown, success has come at a cost. As the cryptocurrency industry morphs into larger, more energy-intensive operations, the Basin’s three public utilities districts (PUDs) are reassessing how they deal with it, and whether they can — or should even try to — keep up.

The sector’s recent growth spurt poses “a very different kind of problem than anything we have addressed before,” Steve Wright, Chelan County PUD general manager, told the crowd at the May 14 hearing. Determining whether the PUD can handle the growth, Wright said, has “required a whole new way of thinking.”

Overwhelming “gold rush”

In a normal year, demand for electric power in Chelan County grows by perhaps 4 megawatts **— enough for around 2,250 homes — as new residents arrive and as businesses start or expand. But since January 2017, as Bitcoin enthusiasts bid up the price of the currency, eager miners have requested a staggering 210 megawatts for mines they want to build in Chelan County. That’s nearly as much as the county and its 73,000 residents were already using. And because it is a public utility, the PUD staff is obligated to consider every request.

The scale of some new requests is mind-boggling. Until recently, the largest mines in Chelan County used five megawatts or less. In the past six months, by contrast, miners have requested loads of 50 megawatts and, in several cases, 100 megawatts. By comparison, a fruit warehouse uses around 2.5 megawatts.

But it’s not simply the scale of requests that is perplexing utility staff. Many would-be miners have no understanding of how large power purchases work. In one case this winter, miners from China landed their private jet at the local airport, drove a rental car to the visitor center at the Rocky Reach Dam, just north of Wenatchee, and, according to Chelan County PUD officials, politely asked to see the “dam master because we want to buy some electricity.”

Bitcoin fever has created other, smaller-scale problems for the utility. Three times a week, on average, utility crews in Chelan County discover unpermitted home miners running computer servers far too large for the electrical grids of residential neighborhoods. In one instance last year, the transformer outside a bootleg miner’s home overheated and touched off a grass fire, Chelan County PUD officials say.

In other cases, utility crews responding to unusual spikes in power usage have found racks of remotely controlled servers whirring away in empty apartments. Worse, when the utility began shutting off power to these so-called “rogue operators” earlier this year, some of them became so belligerent that the utility is installing security cameras and bulletproof glass at its downtown Wenatchee headquarters.

By February, the Bitcoin “gold rush,” as Wright calls it, had become so overwhelming that Chelan County PUD declared a three-month moratorium on new mines to determine whether the county can absorb even a fraction of that demand. But answering that question was more complex than the utility anticipated — and at the recent hearing, the commission voted to extend the freeze another three months.

All told, the three PUDs in the mid-Columbia Basin are considering miners’ requests for well over 2,000 megawatts of power — equal to roughly two-thirds of the total hydropower generated by the Basin’s five hydroelectric dams. And while every request won’t become a contract, the rapid demand is forcing officials at all three public utilities to rethink how they sell power.

The biggest issue, of course, is power rates. Currently, residents in Chelan County pay around 3 cents per kilowatt-hour, or about a third what Seattleites pay and around one fifth of the national average. Rates in Douglas and Grants are in that same ballpark

Those bargain rates are possible largely because the Basin’s five dams generate around six times what the region can use locally. Much of the surplus is exported, at premium prices, to outside buyers such as Puget Sound Energy, and those outside sales subsidize local rates.

But if the utilities are selling more of their power to local Bitcoin miners, they’re exporting less power at those premium prices, which makes it harder to keep local rates low. Further, because much of the surplus is currently committed in long-term contracts, supplying miners with all the megawatts they want might require the utilities do something virtually unprecedented: buy power on the open market, at prices far above what locals have come to expect.

Add to this the many millions of dollars the utilities would need to invest in new substations, transmission lines, and other infrastructure, and suddenly, it becomes conceivable that this new industry might signal the end to decades of cheap power.

More at link.

[dannno]

LOL, last week you were talking about how one bitcoin transaction is equivalent to the amount of power a home uses in a month or some such nonsense? Now a small town is powering nearly a third of the crypto networks and is still able to sell their energy at 3 cents / kWh to the locals?? Did you do the math on that by any chance?

[dannno]

The way the company could handle this would be to grandfather in existing users at the base rate, allowing them to double or add some % of their electricity usage at that rate. Anything over becomes more expensive. New users would have more expensive rates, or you could give them a discount if they only use a small amount - or they could have a tiered rate.

[Zippyjuan]

LOL, last week you were talking about how one bitcoin transaction is equivalent to the amount of power a home uses in a month or some such nonsense? Now a small town is powering nearly a third of the crypto networks and is still able to sell their energy at 3 cents / kWh to the locals?? Did you do the math on that by any chance?

And I questioned that particular stat (which was actually "as much electricity as a household in the Netherlands" which is a low electric use country- they use natural gas for most of their heating and cooking).

According to this source, http://www.nationmaster.com/country-...lds-per-capita

the average household in the Netherlands uses 1,484.82 kWh electricity per year compared to 4,599.49 kWh for the United States which is more than three times as much. That is about 120 kwh per month in the Netherlands.

[Warrior_of_Freedom]

And I questioned that particular stat (which was actually "as much electricity as a household in the Netherlands" which is a low electric use country- they use natural gas a lot for heating and cooking).

According to this source, http://www.nationmaster.com/country-...lds-per-capita

the average household in the Netherlands uses 1,484.82 kWh electricity per year compared to 4,599.49 kWh for the United States. That is about 120 kwh per month in the Netherlands.

I bet a lot of that is due to the ungodly amount of electricity $#@! like cable boxes use. They're ridiculous. When you turn them off, they're not even off. They stay on. It's a fraud. You have to unplug them.