|Bitcoin is not a precious metal, nor is it used as currency.
(Photo by Pierre Bothiry, Unsplash)
Kentucky Public Service Commission utility regulators rejected Kentucky Power‘s controversial deal to “give millions in energy price discounts to a planned cryptomining facility in Louisa, Kentucky,” a Mountain Association press release says. “Today’s decision comes at a time when Kentucky Power has proposed a whopping 18% increase in rates for families and individuals.” Regulators feared that the company would have to buy so much power from other sources that it would drive up rates for all consumers, many if not most of them rural – in one of the nation’s poorest areas.
Here is a more in-depth primer about bitcoin/crypto mining, but essentially, shoe box-sized computers “earn” bitcoin by being the first to find the correct answer to complex calculations aimed at preventing counterfeiting and stealing. But all that “mining” computation, and the massive fans needed to keep computers from overheating, is noisy and sucks up huge amounts of electricity.
|Louisa is in Lawrence County,
Chinese bitcoin companies fled to the United States seeking land and cheap electricity after China cracked down on its cryptomining in 2021. Ebon International, a Chinese-owned cryptomining company, proposed a $250 million computing complex on land leased from Kentucky Power at the Big Sandy Generating Station in Lawrence County. “Kentucky Power and Ebon executed a contract last August for the utility to provide up to 250 megawatts of power at a discounted rate subject to commission approval,” reports Ryan Van Velzer of Louisville Public Radio. “In return, Kentucky Power said that Ebon would create as many as 100 jobs in an otherwise economically challenged part of the state.”
“Commissioners quashed the deal, saying the risks outweigh the potential economic benefits,” Van Velzer explains. “Among those risks, the commission said Kentucky Power will lack the power to meet its existing customers’ demand beginning in 2026, let alone the new crypto facility, based on the utility’s future plans. . . . ‘Kentucky Power’s lack of capacity that can produce energy creates the risk that energy prices rise in the footprint, and as a net purchaser of energy, the power bills of all customers will go up,’ the commission wrote in its order.”
Investing in cryptominig is considered risky, but “advocates argue putting these facilities on former coal mines gives the land a second life, while also plugging crypto companies directly into the utilities to give them the vast amount of power they need,” Van Velzer reports. “Opponents say there’s not much to keep companies around once the discounts expire because they could pick up their servers and relocate.”
Kentucky isn’t the only state targeted by cryptomining companies. Nebraska has the ninth lowest electricity prices in the country, reports Natalia Alamdari of Flatwater Free Press. A crypto mining company built its 11-acre facility on the outskirts of Kearney, Nebraska: “Here sits dozens of what look like shipping containers. . .wedged between a solar field and a corn field, the thousands of computers mine for cryptocurrency. Together, they use as much electricity as the entire city of Kearney, pop. 33,790, to do it. . . . It’s also likely the first of many such centers to set up shop in the state, as the still new and oft-volatile crypto industry carves out a home in rural America.”