DPW Holdings Inc. will use power generated by the Valatie Falls, New York hydroelectric dam for a bitcoin mining farm that is expected to become operational in the fourth quarter.
Valatie Falls Hydro LLC bought the 1-megawatt dam in March 2018 using debt financing from Digital Power Lending, a DPW subsidiary. DPW’s Super Crypto Mining subsidiary will establish a cryptocurrency mining farm at the site of the dam, using the company’s AntEater miner. The company developed the cryptocurrency mining device in partnership with Samsung Semiconductors this year.
Low-Cost, Renewable Energy
The hydroelectric dam, originally built in 1983, will produce low-cost, renewable electricity for the mining farm, which will become fully operational during the fourth quarter, DPW Holdings announced in a press release.
“Our successful repurposing of Valatie Falls dam to provide clean, low-cost, renewable power to Super Crypto’s future co-located mining farm is another important step in our strategy to create an economically viable, self-sustaining cryptocurrency mining business,” Milton “Todd” Ault, III, DPW Holdings CEO and chairman, said in a prepared statement. “This project provided a unique opportunity for DPW subsidiaries to collaborate and innovate to create a new model for cryptocurrency mining, for which electricity is by far the largest operational cost factor.”
The company’s power solution engineers at Coolisys Technologies, Inc. worked with its cryptocurrency mining engineers and Valatie Falls Hydro, LLC’s hydroelectric engineers to retrofit the dam, Ault said.
Regulators Scrutinize Crypto Power Use
The lower cost power rates could allow the company to mitigate the impact of possibly higher rates for crypto mining farms. The New York State Public Service Commission announced in March that upstate power authorities can charge crypto mining businesses with high density loads higher rates.
The commission allowed municipal power authorities to enact tariffs for high density load customers having a maximum demand surpassing 300 KW and a load density exceeding 250 KW per square foot annually that do not quality for economic development assistance.
The regulator’s action was spurred by a petition from 36 municipal power providers that called the New York Municipal Power Agency to act in response to high electricity costs for residential and business customers caused by the rising power demand from cryptocurrency miners.
Last month, the New York State Public Service Commission approved new rates for the Massena Electric Department that will permit high density load customers, such as cryptocurrency customers, to quality for service under individual agreements. Cryptocurrency and other high load customers with maximum demand in excess of 300 KW will be eligible for service under the individual service agreement.
Due to the abundance of low cost power in upstate New York, the commission believes it can serve the needs of existing customers and also encourage economic development.
The commission believes Massena could receive “significant revenues” if cryptocurrency companies establish operations in the region.
Precedent Already Set
DPW Holdings is not the first company to establish its own hydropower facility for crypto mining.
MGT Capital Investments secured a location in central Washington in 2016 with hydropower to launch a bitcoin mining operation. The company expected the facility to generate processing power to operate ASIC computers for mining.
Growing demand for hydroelectric power among bitcoin miners is expected to drive higher electricity rates in some regions. This past February, Hydro-Quebec said it could consider raising its rates for bitcoin miners.
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