Home / Blockchain / After the failure of bitcoins and a local bankruptcy, Douglas County doubles up on blockchain

After the failure of bitcoins and a local bankruptcy, Douglas County doubles up on blockchain

Douglas County may have been burned by the cryptocurrency boom, but now wants to build a "blockchain innovation campus", where researchers could develop new uses for esoteric and computer-intensive technology and, ideally, position this rural community for a share of industry when it arrives.

Although much of the world seems to be done with cryptocurrency, the bitcoin boom in central Washington is doubling.

In Douglas County, where easy access to low-cost hydropower has sparked a boom in cryptocurrencies in 2017 – followed by a collapse in 2018 – local officials are betting that high-speed computers and complex technology " blockchain "who drove those digital currencies could now launch another, less volatile industry.

To accelerate the next phase, the county wants to build a "campus blockchain innovation", in which researchers can develop new uses for esoteric and computer-intensive technology and, ideally, position this rural community for an industry share when it arrives .

"There's more to the [cryptocurrency] the story, in addition to the boom and the bankruptcy, "says Lisa Parks, executive director of the Port of Douglas County, who hopes to find the campus at an old industrial site in the city of Rock Island, on the Columbia River.

The blockchain was conceived as a tool to enable secure financial transactions without banks or other intermediaries. But the concept of blockchain, in which transactions are processed and recorded on multiple computers through a decentralized network, can work for any data-rich interaction.

Over the next decade, supporters argue, the blockchain will revolutionize everything from food supply lines to real estate contracts to self-driving cars.

But launching this revolution will require an intense effort of research and development, one of those that the center of Washington, with its low-cost power and, thanks to the bitcoin boom, a huge pool of high-speed computing skills and expertise in cryptocurrency, is well positioned to accommodate.

"We have some unique resources that make our region interesting for that sector," says Parks of the nascent blockchain industry. "We're looking for a way to capitalize on it."

The idea of ​​the innovation campus proposed by Douglas County is part of a larger effort by the Washington center to cope with the consequences of the cryptocurrency boom, which has hit the counties of Douglas, Chelan and Grant since 2014.

The catalyst was low cost, generated by the five large hydroelectric dams in the region. The trillions of computer calculations necessary to produce bitcoins and other cryptocurrencies consume huge amounts of electricity.

In 2017, with the collapse of cryptocurrency prices (bitcoin rose from $ 1,000 to nearly $ 20,000), cryptocurrency "miners" and investors from as far away as China demanded thousands of megawatts of power from the public districts of three counties. One megawatt is enough to feed anywhere from 125 to 400 homes in central Washington, depending on the time of year.

In early 2018, a collapse in cryptocurrency prices brought the air out of the central Washington bitcoin boom.

But well before then, residents and local officials had rejected the burden of the industry on local power systems. Public servants, worried that they had given so much power to an unwanted and unstable industry, began to launch a series of restrictions on miners.

In the counties of Chelan and Grant, utilities officials eventually increased the price of power for new miners. The new tariffs are so high, some operators in the sector say, that they have effectively blocked the expansion of mining activity. For example, in Grant County, total energy demands from potential miners have dropped from around 1,500 megawatts since August, to just 313.5 megawatts today, according to Grant PUD spokesman Ryan Holterhoff.

But Douglas County has drawn a different course. In addition to efforts to host a new and bold blockchain industry, the county continues to encourage the old cryptocurrency mine.

For example, the increase in the Douglas County public utility district rate for new miners was not as sharp as in the counties of Chelan and Grant. As a result, as energy demands have declined, Douglas County continues to see new mining operations.

In November, Bitmain, a large cryptocurrency company based in China, opened a $ 20 million mine in Douglas County near the city of East Wenatchee. The mine, which houses about 8,000 individual computers housed in five warehouses, will use 12 megawatts of electricity, depending on the utility, or enough to feed from 1,500 to 4,800 homes.

Douglas County is even attempting to revive a disused mining operation that has become a local symbol of the bitcoin boom and failure.

The failed venture, which was launched by the cryptocurrency pioneer GigaWatt, stalled last year after the company ran into construction delays and other problems and declared bankruptcy. Since then, the port of Douglas County, which owns the GigaWatt site, has spoken with several groups of investors competing on plans to use the mining facilities, but also for other applications, such as data analysis based on the cloud and artificial intelligence, which can use the same type of compact high-speed computing.

One of these groups of investors, the Red Team Investments, based in Texas, also hopes to be involved in the innovation campus in nearby Rock Island.

The continued embrace of Douglas County cryptocurrency might seem like an overly risky move for a community that has probably been burned by bitcoins.

Gigawatt, for example, owed more than $ 310,000 to the district of public utility in Douglas County, according to his declaration of bankruptcy. The county of Port of Douglas is at the center of over $ 50,000, states Parks.

But Douglas County officials see their crypto-friendly position as a way for this poorly prosperous rural community to exploit its single major economic advantage – to create a data-driven, high-wage industry.

Parks points to nearby Quincy, where the rise of huge data centers for Microsoft and other technology companies has brought not only jobs but a massive increase in sales and property taxes.

Douglas County crypto-optimism is shared by the State Department of Commerce, which considers the extraction of cryptocurrencies as a potential way to diversify rural economies. The director of the business development department, Evan Wendlandt, called the new Bitmain mine "a great victory" for the county. The state agency also supports the innovation campus with a grant of $ 50.00.

More generally, says Parks, the sector of existing cryptocurrencies is what is fueling the next blockchain interposition. The reason Douglas County now has a high-speed computing industry, Parks says, is "largely because bitcoin mining and cryptocurrency pushed it in that direction."

Malachi Salcido, another local mining pioneer, says that the local bitcoin industry, despite all its volatility, was instrumental in attracting the capital and talent needed for the next phase of the industry. But since the next phase could take years to fully emerge, it is crucial that local officials and residents do not fix themselves on short-term price volatility, he says. "What's happening in the [cryptocurrency] the market right now is simply speculation, "says Salcido." My message is, do not throw the baby out with dirty water. "

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