DOUGLAS COUNTY, Wash. –
Although much of the world seems to be done with cryptocurrency, the bitcoin boomtown of central Washington is resisting.
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 on high-speed computers and complex blockchain technology 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 position this rural community for an industry share when it arrives.
"There's so much more in the history of cryptocurrency than boom and failure," says Lisa Parks, executive director of Port of Douglas County, who hopes to find the campus at an old industrial site in Rock Island, southeast of Wenatchee, on the Columbia River.
The blockchain was designed as a tool to enable secure financial transactions without banks or other intermediaries.
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.
The launch of this revolution will require an intense research and development effort – one that the center of Washington, with its low-cost power and, thanks to the bitcoin boom, a huge pool of high-speed processing capabilities and know-how of cryptocurrency, it is well positioned to accommodate.
"We have some unique resources that make our region attractive to that sector," says Parks. "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 an economic power generated by the five large hydroelectric dams in the region.
The trillions of computer calculations needed 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 the 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.
Long 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 unintended and unproven industry, began to launch a series of restrictions on miners.
In the counties of Chelan and Grant, civil servants eventually increased the price of power for the new miners. The new rates are so high, some industry players say, which have effectively halted the mining sector.
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.
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 mining.
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 anywhere 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, crashed 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 facilities for mining and also for other applications, such as cloud-based data analysis. and artificial intelligence, which can use the same type of high speed compact computing.
One of these groups of investors, the Texas-based Red Team Investments, also hopes to be involved in the innovation campus in the nearby island of Rock.
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 Douglas County's public utility district, according to his bankruptcy declaration. The county of Port of Douglas is at the center of over $ 50,000, states Parks.
Douglas County officials see their crypto-friendly position as a way for this poorly prosperous rural community to exploit its single major advantage – economic power – to create a high-paid, data-driven industry .
Parks points to nearby Quincy, where the rise of huge data centers for Microsoft and other technology companies has led to jobs and a massive increase in sales and property taxes.
Douglas County crypto-optimism is shared by the State Department of Commerce, which considers cryptocurrency extraction 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 $ 50,000.
More generally, says Parks, the area 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 crucial to 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 is happening in the cryptocurrency market right now is simply speculation," says Salcido. "My message is, do not throw the baby with the dirty water."