Low electricity rates in Washington and Oregon have attracted bitcoin miners. But the influx has also courted some controversy after one utility along the Columbia River proposed raising rates specifically on the bitcoiners, according to Northwest News Network, a collaboration of public radio stations. Washington and Oregon have low electric rates on account of hydropower dams.
The utility, the Chelan County Public Utility District (PUD), is concerned about bitcoin miners taking too much power. The PUD is also reluctant to want to attract too many miners since bitcoin’s volatility doesn’t ensure the miners will be steady customers.
The PUD recently proposed to nearly double the rates for Dedicated Hosting Services in Entiat, Wash., which leases space to bitcoin miners. The company operates out of a former machine tool shop.
Jared Richardson, a partner at Dedicated Hosting Services, said the rate increase is discriminatory and would “wipe out our business in the area.”
The rate hike would impact nearly dozen bitcoin server farms in Chelan County.
John Stoll, managing director at Chelan PUD, said the low-cost electricity from the hydroelectric dams is a finite resource and power managers are concerned about the bitcoin industry consuming the spare energy capacity.
The proposed rate hike has caused a fairness debate.
Bitcoin Volatility Also A Concern
Stoll said the volatility of digital currency also raises a concern. Bitcoin operations emerge and then disappear. “That creates issues for a utility,” he said.
Last year, one Chelan County resident compared bitcoin miners to “shooting stars,” according to The Wenatchee World. The resident said the PUD might have to invest millions in new substations for the miners only to have them close their doors when they can no longer compete with bitcoin miners worldwide.
Malachi Salcido, a mechanical contractor in Wenatchee, Wash. who has expanded into bitcoin mining, said blockchain technology has the potential to grow in Central Washington. Hence, he wants the PUD to take a cautious approach and not quash the opportunity that bitcoin and the blockchain present. Salcido said he would like to see the parties collaborate on a solution.
The utility commissioners have instructed their staff to seek a compromise. The bitcoin companies, for their part, are exploring opportunities in neighboring counties.
A number of miners have established operations in the Douglas County PUD, according to Meaghan Vibbert, a district spokesperson. Vibbert said there have been no problems as the district’s load grew by 1.7% from June 2014 to June 2015, which is consistent with recent yearly averages.
The PUDs in Douglas and Grant counties said they require customers to pay for any necessary infrastructure upfront.
Other Big Power Users
Bitcoin miners are not the only businesses drawn to the area for its low power rates. There has also been an influx of data centers. Last year, Chelan County imposed a moratorium on new requests for large electricity users, according to The Wenatchee World. The PUD agreed to a moratorium after receiving an unprecedented 34 inquiries for 220 average megawatts of electricity.
A hearing has been proposed Feb. 1 2016 at 1 p.m. in the Chelan PUD Auditorium in Wenatchee for input on the rate proposal. The commissioners have pledged not to take any action at the meeting.
On Feb. 3, the PUD and the bitcoiners will co-host a forum at Wenatchee’s Confluence Technology Center to share information. The entrepreneurs will discuss bitcoin’s economic benefits and what blockchain technology can bring.
Images from Shutterstock and Chelan County PUD.