Bitcoin Miners Flock to the ‘Buckle of the Power Belt’

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Wenatchee, Wash., which a local daily dubbed the ‘Buckle of the Power Belt’ for its vast hydropower potential back in the 1920s, is drawing in bitcoin miners these days. The state’s Columbia River- fueled dams are famous for their hydroelectric power, which produces cheap energy rates and which is an attractive feature for people interested in the electricity-intensive process of creating more digital coins. Wenatchee is also home to Dell, Yahoo and Microsoft data-storage facilities, and the cryptocurrency boom is the latest to grip the region.

A bitcoin mining operation typically runs 24/7, which requires intense cooling systems to prevent the servers from overheating, all of which commands enormous amounts of power. In Wenatchee, bitcoin miners fetch rates as low as $0.02 to $0.03 per kw hour. The city also has a robust internet network and chilly nights that support the server-cooling process.

Wenatchee, Wash. Mayor Frank Kuntz told The Wall Street Journal:

“If you ask the guys at UPS or FedEx what they’re delivering to Wenatchee, I think they’d tell you it’s a whole bunch of bitcoin mining machines.”

The pipeline for bitcoin mining projects is so robust there could be a doubling in demand for power, which would require more electricity infrastructure in the region, the WSJ story indicates. In the county where Wenatchee is located, for instance, the requests for services are “astounding,” according to a utility official there.

It’s a good thing that politicians are currently discussing US infrastructure reform. But without an overhaul of the electrical grid, the demand could overwhelm the power systems, leading to power outages or worse, sparking fires.

CNBC visited one of the local bitcoin mining operations last month, which is one of the largest such facilities in the country. Salcido Enterprises, which has been operational since 2014, mines as many as BTC 7 per day. They’re ramping up operations and targeting BTC 50 by mid-summer.

Salcido is about to have more competition, as according to the WSJ story in the pipeline are four projects, each of which has a capacity of 100mw, which is enough to generate electricity for tens of thousands of homes. Meanwhile, hundreds of applications have been pouring in, peaking on the heels of last year’s record run in the bitcoin price.

IMF Response

IMF chief Christine Lagarde recently criticized the bitcoin mining process as an “energy angry industry.” But many bitcoin mining operations seek out locations where alternative power is abundant, requiring less of a strain on the electricity grid and keeping costs lower than usual.

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Gerelyn is a fintech and cryptocurrency journalist who started her career writing about traditional finance/Wall Street. She has been reporting on financial services for the past 15-plus years. In full disclosure, she holds bitcoin (BTC).