Chelan City Council places moratorium on Bitcoin Mining in Chelan

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by Richard Uhlhorn

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“I move to immediately impose a moratorium on the issuance of building permits and /or authorization of crypto currency and high density load operations for an indefinite period of time or until such time as the planning department brings forth appropriate code approved by council.”
Councilwoman Kelly Allen

Chelan City Council had a special presentation on the PUD’s Electrical Load Growth by Chelan County PUD’s Chad Rissman, Director of Engineering and Asset Management and Andy Wendell, Director of Customer Services.

It was a fascinating quarterly update on what is happening with demand for electrical loads in the County and the concerns the PUD has going forward.

The PUD is seeing increased demand for its electrical output because of economic confidence that is driving residential building, new technologies, recreation and retirement, and the popularity of crypto currency mining companies attracted to the Chelan, Douglas and Grant Counties because of the low electrical rates.

Bitcoin mining refers to the process of connecting computers to the global Bitcoin network and using them to verify transactions between users of the crypto currency. The computers that do this verification work receive small Bitcoin rewards for their trouble, making it a lucrative exercise, especially when done at a large scale.

The PUD has had 75 High Density Load (HDL) inquiries between October and December, 2017. “Our phones were literally ringing off the hook from around the country and around the world,” said Andy Wendell. The PUD is also seeing a significant number of applications for HDL service and 95 percent of those applications are for leased space. “They are not coming here and building… they are looking for leased space.”

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Andy Wendell – PUD Director of Customer Service
Wendell holds a melted electrical box from an unauthorized Bitcoin mining operation where the electrical service was overloaded.

This means that these Bitcoin miners are adding a transient load to the system. “They are here, but they may not be here next month or a year from now,” he said. “That’s big concern for us. It is yet to be determined if these are long term sustainable loads.”

In addition, to the legal applications for HDL service, the PUD has unapproved HDL loads existing within its system and that is of real concern (insert picture of burned box). The Bitcoin computers work in a series and run 24/7. When hooked up in a normal residence they increase public health and safety. One unapproved mining sites started a fire when the electrical system couldn’t handle the load. Over one acre burned from the fire. “Our transformers are simply not designed for these loads.”

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Chad Rissman – PUD Director of Engineering & Asset Management

Chad Rissman told the Council that the proposed “Advanced Metering” system would help alleviates problems of overloading because they could monitor these loads immediately. “We are really looking forward to this system.”

The PUD has increased its rate for Bitcoin Mining and other companies requiring High Density Loads to 3.8 cents per Kw hour. “That’s not a big difference, but even 5 cents per kilowatt hour is attractive to these companies,” said Rissman. The reason for the increase, passed by the PUD Board is that HDLs require significant upgrades in infrastructure to handle the loads. There is also a significant up-front fee to upgrade electrical service to handle these loads. For someone wanting 5 megawatts of power, the upgrade costs could run just under a million dollars according to Rissman. “We are trying to figure out a rate schedule. We can’t just jack up the rates…it has to be justified.”

They also want to work with the County and Municipalities on this issue.

Councilman Kelly Allen said, “It’s not really economic development. If a resident is operating do you notify the communities?” she asked. “We are looking at that,” said Wendall. “Our focus is on health and safety and we have the authorization to shut down unauthorized operations.”

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Councilman Tim Hollingsworth

Councilman Tim Hollingsworth said this type of operation should fall under home occupation businesses and if unauthorized it would be a code violation. “It seems to me that the key is building violations,” he said.

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Mayor Mike Cooney

Mayor Cooney chimed in and said, “I don’t see anything good coming from this.”

Allen asked Wendell if others are taking similar positions to the problem. “Waterville has passed a moratorium,” said Wendall. He also said Wenatchee passed a moratorium back in 2015 to not allow cargo containers to be used on vacant lots for this purpose.

Mayor Cooney said that with the difficulty of just trying to site a new substation on the north shore of Lake Chelan that it would be ridiculous to allow this. “In the past two days I’ve had three calls about crypto mining. “They said it would bring in other industry with it. Seems like a flim flam to me,” said Cooney. “I hope our city will take a stand and create a moratorium.”

Allen then made the following motion which was passed unanimously. “I move to immediately impose a moratorium on the issuance of building permits and /or authorization of crypto currency and high density load operations for an indefinite period of time or until such time as the planning department brings forth appropriate code approved by council.”

Chelan County is not the only area in the world where Bitcoin mining is exploding. Iceland also has a major problem with its exponential growth and Iceland’s Mr. Sigurbergsson said, “We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation. That can’t be good.”

Excellent Wall Street Journal Article

More information on this fascinating business can be found on the PUD’s website at Chelan PUD

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