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Electric manufacturers are not sure if the "miners" of cryptocurrency are friends or enemies.
Miners, who use powerful computers to generate bitcoins, ethereum and other cryptocurrencies solving complex computational problems, are real powers that can bring new sources of income to energy producers. But revenues generally come at a price: millions of dollars of investments in new power plants and power lines.
For their part, utilities hesitate to commit those funds for fear that the fund will fall from the cryptocurrency market, leaving them blocked with the account for facilities no longer in use.
"Making sure that electricity companies take cryptocurrency extraction seriously has been a struggle," said JohnPaul Baric, managing director of MiningStore, which manufactures technology for the extraction of cryptocurrencies. "Mining is still in its infancy, and power companies say they are not sure of its longevity."
It is not that electricity companies do not want more revenue. But in Grant County's Washington state, more than 100 cryptocurrency miners are demanding power. Combined, they are asking for 1,700 megawatts of new power – this is the equivalent of two nuclear power plants, or 1.5 times the energy needs of the city of Seattle. The average load of Grant PUD is around 600 megawatts.
"We, like any other utility, are not prepared to handle this type of new demand," said Kevin Nordt, general director of the public utility district of Grant County, known as Grant PUD. "Trying to get that kind of built infrastructure would take many, many years and will require millions if not billions of dollars in investment.There's a lot of risk because it's a nascent industry with a lot of unknown variables."
Cryptocurrency miners use a large number of computer servers – which use huge amounts of electricity – to solve complex mathematical puzzles necessary to create virtual currencies such as bitcoins and ethereum. Only Bitcoin miners use more energy than the entire country of Ireland. There are over 2,000 different types of cryptocurrencies.
Grant PUD's popularity with cryptocurrency miners stems in part from its low price for electricity generated by power plants on the Columbia River, Baric said. Electricity costs are often the highest costs for cryptocurrency miners.
"We are the most powerful business ever – we use crazy amounts of energy," Baric said. "The costs of electricity are important."
The average cost of electricity in the United States is around 12 cents per kilowatt hour. But Grant PUD sells its electricity for only 1-2 cents a kilowatt hour, Baric said. Grant PUD is a non-profit hydroelectric utility owned by the community based in Moses Lake, Washington, about three hours southwest of Seattle. Its power generation facilities cover 2,800 square miles.
Because of the high demand, Grant PUD has temporarily stopped accepting customers from cryptocurrency mining so that it could develop new policies across the industry. PUD has decided to create a new class of customers called the "evolving" class. The class was not meant only for cryptocurrency, but for any other radical and disruptive technology that could take shape in the future, said Nordt.
The evolving industrial class would have a price in the risk associated with the creation of new infrastructure for an industrial sector without extensive experience, he said.
"We needed to look at this differently," he said. "We do not know how regulatory and other problems will stop for mining."
Miners, meanwhile, are also suggesting ways they can be useful to utilities. One example is that miners use the "peak load" features of a utility that often remain inactive. Most utilities build their own structures in order to have capacity even in the very hot days of July and August, when everyone runs their air conditioners.
Miners could use unused peak load capacities throughout the year and stop mining when utility is needed for extra electricity on those hot summer days. Baric sells products that automatically interrupt the extraction operations when the peak load is used.
"Current physical extraction units would remain free and staff would have a day off," Baric said. "Miners would know for those four or five hours on that hot July day, they will be disconnected."
Miners are also happy to take unused electricity from the hands of manufacturers, said Baric. Utilities inevitably create more energy than they use and generally allow power to be burned. Miners are instead willing to buy that access energy which is a boon for producers, he said.
"Years ago people were wondering if the Internet would have stayed around, but suggesting that today it would seem silly," Baric said. "It's like that with the cryptocurrency, it's known to the brand and people do not understand it yet, but it's here to stay."
