Chelan County PUD explains cryptocurrency concerns, hazards

CHELAN – Cryptocurrency, or Bitcoin, has been an ever-growing topic here lately. The increased interest of the peer-to-peer electronic cash system, however, also begets an increase in concerns in both safety and financial areas. One of the major concerns of the cryptocurrency is the surging from the unauthorized use of high-density loads (HDL) in homes not wired for such heavy power loads. These concerns were the basis of Chelan County PUD’s presentation to Council, Tuesday, Feb. 13 inside Council Chambers.
Chad Rissman, Director of Engineering and Asset Management, along with Director of Customer Service Andy Wendell, led Chelan councilmembers and staff through an educational presentation on the new digital currency and struggles created by the harvesting of the funds in communities.
Rissman began by explaining the extreme growth of high-density loads in communities. “These are high-electrical loads that can fit in a very small area,” he began, “and we have two primary concerns with that.” The first of the concerns is that the presence of unauthorized HDL usage creates inconsistencies in the projected energy usage for given areas based on certain zoning. “We would like to try and get ahead of this infrastructure,” he explained, “but we’re having a hard time getting our arms around this cryptocurrency because it throws a little bit of a wrench in the mix, so we’re trying to understand what we can do to partner and collaborate and understand what this looks like so we can better plan for it.” The HDL cryptocurrency loads can be mobilization in a very small or low-density place, explained Rissman, “or in some sort of electrical service that wasn’t designed or planned for this type of load to be installed, and as a result we’re seeing some safety related issues.” The overload on the electrical service can, and has, be a fire hazard, especially in residential homes whose wiring are only designed for an average of three to five kilowatts (KW), but are ranging upwards of 100 megawatts (MWs) with the harvesting of Bitcoins. “We’re looking to expand our substations,” stated Rissman, explaining that the current substations in the area are already loaded over 80 percent of its capacity, “we’re trying to find a way to respond.”
Wendell took over, transitioning the discussion into what the cryptocurrency is and how it drives the current electrical demands. “We’ve used the term Bitcoin tonight,” he began, “and that’s probably the most popular and well-known currency … there are literally hundreds of cryptocurrencies that have popped up over the internet and in the digital world, so we tend to mix cryptocurrencies and Bitcoin, but cryptocurrency is really a broad definition for the digital mining process that we’re most concerned with for energy consumption.” The value of the Bitcoin has increased from around $600 and $800 a year and a half ago when the PUD reevaluated their HDL pricing, as of recently however, that value has jumped tremendously to just at $18,000, “you can imagine that it drew a lot of interest in the mining process,” he expressed to Council, “our phones at the PUD literally were ringing off the hook with people from all over the country, all over the world, because they needed electricity. Electricity is the primary resource for the mining process.” When your primary tool for harvesting the cryptocurrency is electricity, where else would you go but to the area with the cheapest and more reliable power service, he explained, “and that’s in Chelan, Douglas and Grant Counties.” Why is this a concern for Chelan’s community? The electricity price in Chelan, Douglas and Grant Counties are five cents per kWh or less, while surrounding counties average seven to nine cents. Between October and December of 2017, when the value of the Bitcoin jumped, Wendell stated they saw over 75 HDL inquiries from individuals across the globe. “We literally had people getting off the plane in Seattle, from Asia, renting a car and were in our office within hours of entering the country, wanting massive amounts of power,” he emphasized on the demand for the county’s power. “When I say massive amounts of power, I’m talking about 100 MW requests,” he continued, “to put that in perspective, our entire Chelan County uses an annual average of 200 MWs, that’s how much energy we use, so we’re getting requests today for 100 MWs, which is half of what is used throughout the entire county.”
The requests are what the PUD refers to as a high-load factor, because they run full-speed, 24 hours a day, seven days a week, 365 days a year, Wendell explained. “As you can imagine,” he continued, “that far exceeds any load requests that we’ve ever had. The largest industrial customer that we have in our service industry runs just under five MWs … and we’re getting multiple request for 100 MWs, and everywhere in between.” The gamut of requests is very wide, with a low range of five MWs and high range of 100 MWs. Over 95 percent of these requests are for properties within a leased space, Wendell explained, “they’re not coming here building new buildings with bricks and mortar, they’re essentially looking for existing operating space.” Which can be beneficial to those property owners looking to lease out a building that may have been sitting vacant, however how to translates to the PUD, he stated, “is we recognize it to be more of a transient load. The business may be here right now, but they may not be here in a month or a year from now.” The concern then, for the PUD, is that any investment in an infrastructure to support the high-demand in electricity may not prove to be fruitful in the end.
A byproduct from these properties is the high amount of heat released from the harvesting operation, as well as the utility supply cables and applicators being at high risk for fire, but so are the leased homes and buildings, as well as surrounding structures.
Bitcoin harvesting is extremely unstable and leaves the PUD in an uncertain position on how to proceed with planning for the energy usage in service areas. With a number of harvesters using unauthorized load sizes, and the current energy metering in place, the PUD staff is unaware of these locations pulling the excessive energy until nearly a month afterward. The new Smart Meters from the PUD will help with identifying these properties and safety hazards in real time, explained Rissman. “We’re trying really hard to insulate our customers that exist today from whatever problems exist and develop from the cryptocurrency,” he expressed, “that’s from a revenue standpoint, from an infrastructure standpoint and a safety standpoint.”
Councilman Tim Hollingsworth voiced his concern for protecting the citizens rates and keeping the community paying some of the lowest rates in the world, which Wendell then replied, “in my tenure at the PUD, a council like this has a really strong voice with our planning commission,” he began, then stated, “and your voice is heard and you have the ability to influence policy at the PUD.”
As councilmembers concluded the meeting, a motion was proposed by Councilwoman Kelly Allen requesting an “immediate impose a moratorium on the issuance of building permits and/or authorizations of cryptocurrency in high-density load operations for an indefinite period of time or until such time that the planning department has brought forward an appropriate code.” A moratorium can be in place for six months, advised Chelan Planning Director Craig Gildroy. The council unanimously passed this motion, effective immediately.