Cryptocurrency miners using powerful computers are creating new challenges for electric cooperatives as they move into co-op territories and demand huge amounts of electricity.
Miners typically compete to quickly solve math problems using multiple high-speed computers and servers to earn Bitcoin or some of the other thousands of types of cryptocurrency, which can be converted into dollars.
“The mining is very energy-intensive and some areas with lower power prices are seeing dramatic increases in requests for power,” Allison Hamilton, director of markets and rates in NRECA’s Business and Technology Strategies department, wrote in an advisory for co-ops.
“In many cases, these operations are discovered after the fact, when the utility sees changes in meter reads, or worse when the intense power draws cause accidents or fires. Some of these operations have grown from a few computers in a garage to large configurations of specialized ‘rigs.’”
While there are big risks, there also are potential benefits for co-ops, which may be able to grow their loads at off-peak periods since miners can work at all hours, Hamilton said.
“Getting prices and terms right will be the key to meeting the challenges and possibly benefiting from the new mining loads,” she said.
Gwen Kautz, CEO and general manager of Dawson Public Power District in Lexington, Nebraska, has been proactive in developing policies for crypto mining operations if they come.
One of her biggest concerns is the mobility of crypto miners, who often operate out of trailers and can move easily. Her other major worry is the risk that the miners could drive up the cost of the wholesale power that Dawson buys and then leave, saddling Dawson with a bigger bill for up to a year afterward. The loss for Dawson could be in the millions, she said.
“It’s more or less a given that these loads need to pay upfront construction/connection costs for precisely these two reasons,” Kautz said.
In Oregon, Roger Kline, general manager and CEO of Northern Wasco County People’s Utility District in The Dalles, has had experience since about 2015 with both fly-by-night and serious crypto mining customers.
“We have three substantial operations using about 4 megawatts worth of power and a pretty regular revolving door of what I call tire kickers—people who just want to know how much power they can get, how fast and how cheap,” Kline said.
“We tell them: ‘We can likely meet your industrial needs. Just recognize that we’re not going to subsidize your personal business venture.’”
Kline said the PUD requires crypto miners to pay for all line extensions upfront and put down deposits on their monthly bills. Those requirements have discouraged miners looking to make a quick buck and leave.
The miners that are currently operating have proven to be good customers, he said.
“It’s been a valuable opportunity to grow our load and to learn about the industry,” Kline said. “The key is to be clear and transparent upfront with them and get your process ready now. If you’re ready, it can be a mutually beneficial relationship.”