As Bitcoin price is strongly rallying, the US state of Washington’s public utility districts (PUDs) have put their utility crews on high alert with the possibility of rising power bills with an influx of cryptocurrency miners to the region.
According to a Seattle Times report, the region is expecting a surge in illegal cryptocurrency mining operations as the electricity costs there are cheaper with the abondance of hydroelectricity.
The region saw a massive influx of commercial Bitcoin miners in 2017-18 when the digital currency prices almost touched $20,000. The report outlined that the miners from as far as China migrated to central Washington to mine Bitcoins for cheap.
This time, the PUDs are expecting a spike in illegal Bitcoin minings as they almost doubled the electricity prices for commercial cryptocurrency miners. This price hike was in response to the 2017 rush when the Grant County PUD alone received requests for supplying 2,000 megawatts of power, three times the total hydroelectric output in the region.
Availability of cheap electricity is always the priority of energy-intensive cryptocurrency mining operations. And with the availability of cheap electricity in various regions in the United States, many miners are setting bases.
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Residents around the river basin in Seattle pays as little as 2.33 cents a kilowatt-hour, while the standard rate in the state is 12 cents. The average electricity rate in the country is even higher at 13.6 cents.
A Risky Business
Though this looks like a great opportunity for the PUDs, the uncertainty of the mining business makes it otherwise.
“The biggest concern we have is somebody coming in, we build 50 megawatts’ worth of capacity for them, bitcoin prices change, and then they just leave,” John Stoll, managing director of customer utilities at Chelan County PUD, explained.
Indeed, Bitcoin prices are highly volatile, and the profitability of mining businesses is closely tied with it. Miners receive rewards in Bitcoin for approving transactions, which they usually liquidate to maintain operating costs.
The commercial miners also need millions of dollars as initial investments for the procurement of mining hardware, and a sudden fall in the Bitcoin prices put the fate of the entire facility in jeopardy.