Crypto miners in Washington State received some bad news in the form of power rate hikes for the next three years. Grant County Public Utility District (PUD) unanimously voted to raise power rates for crypto mining firms starting April 1st. The first price hike on April 1st 2019 will bump up the power rates by 15%, in 2020 prices will go up again – this time by 35% – and finally one last time in 2021 by 50%.
According to PUD, the new rate hikes are due to the fact the industry is unregulated and therefore unstable. It doesn’t want to increase the infrastructure if the crypto miners will end up leaving as this will then affect the price of power for all the citizens of the state. Instead, the PUD will bump up rates for crypto miners to raise funds so they can upgrade local infrastructure.
Inadequate Local Infrastructure
Washington State boasts some of the most picturesque dams in America, but a lot of these dams are aging rapidly. This old technology coupled with power lines and distribution networks designed for small towns is causing trouble for local utility companies. Grant County has two hydroelectric dams – Priest Rapid Dam and Wanapuam Dam – both of which were built before 1965. Designed to provide a combined output of 1,100 megawatts, these two aging dams aren’t efficient enough to cope with rising demand. On top of this, both of the dams have had to undergo expensive repairs in the last several years due to their age.
Increasing Demand for Power
According to a statement from the PUD, it has received new service enquiries to supply more than 2,000 megawatts of power. This is three times the amount currently needed to power all the homes, businesses and farms in the county – and is significantly more than the two dams combined can provide. This increasing demand has come about since the state gave its local municipalities the ability to decide their own power rates for crypto miners. Due to the abundance of hydroelectric power and quiet towns, many municipalities offered very attractive power rates to encourage new businesses to set up in the area. However, the demand has been overwhelming, causing many municipalities to suspend new applications.
Crypto Miners Getting Creative
In order to power their crypto mining rigs, miners are having to become creative. Cheap power is the only way miners can remain profitable in the mining world, and many companies are going to extreme lengths to secure this low-cost power. One firm has come up with a novel idea – repurpose a hydroelectric dam to power its mining rigs. DPW Holdings purchased an old hydroelectric dam in Valatie Falls and refitted it with modern equipment. It is then going to hook up its mining rigs to its new, green, clean, and renewable power source.
Canadian Firm Leading the Way
Hut 8 – a Canadian crypto mining firm – is leading the way when it comes to cheap power. Hut 8 has struck deals with local power companies to supply power at a very cheap rate and secured it for 10 years. This low-cost power deal enables Hut 8 to remain profitable and attracting investors even when the price of Bitcoin falls. Unfortunately, not all crypto mining firms have been so lucky. HashFlare had to shut its doors after the price of Bitcoin fell substantially and the mining difficulty increased. This made operations highly unprofitable and it decided to call an end to its crypto mining operations.
Mining is the backbone of most cryptocurrencies and without miners’ transactions wouldn’t be confirmed – rendering the cryptocurrency useless. This new price hike will only cause miners to move to localities with low power costs and more developed infrastructure. Price hikes will hurt local economies as businesses decide to shut up shop and move elsewhere, so counties like Grant need to be careful when hiking the power rate.