The Chelan County PUD recently unveiled their proposed rate structure for cryptocurrency activities, and local miners are crying foul. At the heart of the issue is the increased variable and fixed costs crypto-mining activities bring. Customer Utilities Rate Adviser Lindsey Mohns explained the new proposed rate structure.
“This rate structure is built the same way as the existing rate structure that cryptocurrency miners are paying right now, which is referred to as Schedule 35. What this new rate structure (Schedule 36) does is brings into it a market consideration on the energy price because we will have to purchase power on the market to serve the variable load associated with cryptocurrency.”
In other words, the costs of increased demand data mining would bring would be passed onto the crypto-miners. Said Kimberlee Craig, Chelan PUD’s Public Information Officer, “Chelan PUD is addressing (the rate structure) in a way that captures the cost and protects the investment for the customers that are already here and invested greatly in our system.”
The ‘investment’ Craig spoke of are the PUD’s fixed costs, which would include dealing with the wear the extra power capacity brings.
“Our upfront capital charges are intended to recover the accelerated cost of infrastructure investment in our system, mainly in our substations, which is kind of the main component of the distribution system.” explained Mohns, “So the upfront charges take into account the capacity that’s used by cryptocurrency miners.”
It also should be noted that the extra power the PUD would have to purchase on the open market would not necessarily be hydro-power. Like all energy purchased from the national grid, it would be a blend of renewable energy and fossil fuels.
During the November 7th meeting in which the Chelan PUD explained the newest proposed rate structure, the end of the meeting was left to questions from the public. This quickly descended into more of a public comment-like forum, in which many members of the cryptocurrency community expressed their displeasure at the proposed increased costs.
Denton Meier, part owner of Firefly Technologies as well as Silicon Orchard, a crypto-mining company, was on hand at the meeting and spoke candidly about how he felt data miners were being ignored and left out of the process.
Said Meier, “I think it’s nice to be able to make comment but I seems like they’ve already made up their mind. What’s been missing is actually a round-table discussion and more of a brain storming session. How can we really affect the local economy, how can we work together? Let’s create a business-case scenario and include the PUD in that. ”
Meier and many other local data miners expressed that, if this rate structure were to be approved, they would move their business elsewhere. Idaho, Montana, Virginia and Ohio were all alternate locations brought up at the meeting.
“Looking at it in a bigger picture it’s not just mining but services that can happen around that. Like jobs creation in programming, finance, and other things that will happen over time with the cryptocurrency market. We have the opportunity to become a hub for that.” explained Meier, “With rates that price us out of that ballgame it’s not that root that we need to then grow those other businesses, so that will happen elsewhere.”
Meier also warned the Chelan PUD that the proposed Schedule 35 structure might only kill local data mining operations but leave the door open for hedge funds to operate in their place. Hedge funds have much greater cash reserves than a local resident operating a few computers out of their basement. That affords the hedge fund the ability to operate at a loss for several years in an effort to keep to a long-term vision.