Chelan County, Washington, an agricultural area two and a half hours from Seattle, has been known for producing apples and cherries. Lately it has a new specialty: bitcoin.
With 16 cryptocurrency mining operations up and running since 2016, Chelan County’s local power provider, Chelan Public Utility District (PUD), is dealing with a surge in new requests to build more mining groups at a much larger scale. Mining could become a multimillion-dollar business in the county with a population of 72,400.
But allowing the mining to expand even further is not an easy decision.
Chelan PUD has multiple concerns: the huge load on the local electricity system, the new demand on infrastructure, and possible risks when cryptocurrency prices drop.
From Oct. 17 to Dec. 17, 2017, Chelan PUD received more than 75 “high density loads (HDL)” inquiries, asking for a power supply ranging from 5 MWs to 100 MWs. During the same period, the price of bitcoin skyrocketed threefold to almost $20,000. “We’ve heard from folks who want to add mining machines tomorrow,” Suzanne Hartman, a spokesperson for Chelan PUD, tells Yahoo Finance. “All I know is: it won’t be tomorrow.”
Chelan boasts cheap electricity, but hurdles remain
With some of the lowest electricity costs in the U.S., Chelan County is a prime location for cryptocurrency mining, in which expensive machines create new bitcoins by racing to solve complex mathematical computations — generating a lot of heat in the process. Electricity costs 2.7 cents per kWh in the county, while the national average is 10.4 cents. Thanks to the Columbia River and Lake Chelan, the PUD generates more hydroelectricity than what local homes and businesses need.
But even with the surplus electricity, Chelan is not quite ready for giant mining farms, which require up to 100 MWs, half of the community’s normal load. “If we accept those, we need to do some major infrastructure investments,” says Hartman of PUD. “That doesn’t happen overnight. We’re not there yet.”
Miners insist it’s worth the investment.
Chelan County PUD has received out-of-state requests, and has been directly contacted by individuals from China, where more than half of the world’s mining activity takes place but recent government policy has sought to curb bitcoin activity. Besides the cheaper power, it’s advantageous to mine in the U.S. where the business environment (for now) is more stable, says Nishant Sharma, a marketing manager at Bitmain, China’s largest mining operator: “The documents are signed and the purposes are very clear. Nothing changes as you establish the facilities.” In China, a mining farm can be set up much faster than in the U.S., but “there could be unexpected changes,” Sharma says.
For now, Chelan’s infrastructure can only accommodate smaller mining facilities with power supplies under 5 MWs. It takes the Chelan County PUD up to a few months to set up a mining farm of that size, according to Hartman, noting that it’s hard to even give an estimate on how long it would take to support a larger farm because the power authority would have to build new power substations.
For now, Chelan County PUD is putting the needs of their regular customers first, over the requests of bitcoin miners flooding into town.
“We’re a publicly owned utility, we’re not going to have something like this adversely impact those people who’ve invested in our power generation for years,” says Hartman. “If bitcoin will not be successful, we will be left with a lot of stranded assets we’ll still have to pay for. We want to ensure our customers don’t get left holding the bag.”
Krystal Hu is a reporter at Yahoo Finance. Follow her on @readkrystalhu
Yahoo Finance is holding a live summit on cryptocurrencies, featuring a range of big-name guest speakers, on Feb. 7 in New York City. Get your ticket here.