The price of bitcoin set another new all-time high Wednesday, shooting past $13,000. The meteoric rise in the value of bitcoin and lesser-known virtual currencies is having a real-world effect in the Pacific Northwest.
Entrepreneurs are bombarding the public utilities in Central Washington with requests for cheap hydropower to run bitcoin computers.
The global computer networks that mint and maintain the ledger for virtual currencies suck electricity big time. So-called cryptocurrency entrepreneurs are beating a path to the home of rock-bottom electricity rates: namely, the Grant County, Douglas County, and Chelan County, Washington public utility districts.
“It seems like every time I go to somebody’s office they’re on the phone with somebody wanting to know, ‘Boy, we’d sure like a lot of power to do some bitcoin mining,’” Chelan PUD Managing Director of Customer Utilities John Stoll said.
He said about 20 serious inquiries had come in over the past couple weeks.
Bitcoin “mining” has nothing to do with picks and shovels. Rather it refers to server farms where banks of computers solve complex math problems to process cryptocurrency transactions.
The first bitcoins were created in 2008 as an alternative system to transfer money online and internationally, independent of any government. The price of one bitcoin a year ago was around $760. On Wednesday, bitcoin set another new all-time high, soaring past $13,159 as monitored by CoinDesk.
“With the price of bitcoins and what that rate is, it is very attractive. Our challenge is capacity,” Stoll told the PUD’s board of commissioners on Monday. “We’re using up our freeboard in our system as we see load growth, whether it be cryptocurrency or even what we’re seeing with tourism, housing, apartments and things of that nature.”
Stoll and his counterparts at neighboring mid-Columbia power utilities are responding cautiously, if not warily. They’re concerned the remarkable surge in electricity demand could be more of a burden than a boon if it endangers the reliability of their systems or creates new costs that have to be borne by existing customers.
“The total new service requests we have outstanding right now is around 500 megawatts of power, which would represent about an 85 percent increase over our current average load,” said Ryan Holterhoff, public affairs officer for Grant County PUD.
The majority, but not all, of those requests come from cryptocurrency companies.
“I think our general manager in one of the recent commission meetings said it best when he said this is unprecedented, the amount of interest we are seeing right now,” Holterhoff said. “At this time, we’re welcoming inquiries, but they’re likely to experience a delay.”
The utility first wants to study how to achieve “smart” growth before giving the OK to new, high-demand industrial customers.
A year and a half ago, Chelan PUD restructured its industrial rates to charge new cryptocurrency server farms more. Douglas County PUD just doubled the hook-up charge for new customers who run at full tilt all the time, which describes this sector.
Cryptocurrency data center owners have made sizable investments in Central Washington. Leases with local port authorities reveal that Wenatchee-based Salcido Enterprises reportedly budgeted $10 million for a new data center near the Wenatchee airport. East Wenatchee-based Giga Watt pledged to sink $20 million into a complex of virtual currency mining “pods” under construction on nearby land, which it said would create 61 new permanent jobs and retain 16 more. Giga Watt is also expanding briskly in Moses Lake, Washington.