Last August, Ebon International, a Chinese-owned company, proposed a $250 million computing complex on land leased from Kentucky Power at the Big Sandy Generating Station in Lawrence County. The contract between Kentucky Power and Ebon promised to provide up to 250 megawatts of power at a discounted rate, with the potential to create as many as 100 jobs in the area.
However, the Public Service Commission (PSC) rejected the offer, citing that risks outweighed the potential economic benefits. Attorney General Daniel Cameron’s Office and environmental groups including the Sierra Club, Kentucky Resources Council, Mountain Association, Earthjustice and others all opposed the deal, claiming that costs would be passed on to ratepayers.
Thom Cmar, an Earthjustice attorney for the public interest groups, noted that “Hardworking people shouldn’t have to pay higher utility bills so that a cryptocurrency company can get millions in subsidies they don’t deserve”.
The decision comes as Kentucky Power requests an 18% rate increase for residential ratepayers. The utility has experienced a number of natural disasters since the last rate increase, and a $2.6 billion sale to Liberty Utilities was terminated in April. It was hoped that Ebon would fill the gap and help cover the fixed costs of power plants and transmission lines.
Cryptomining, the process of completing “proof of work” calculations for digital currency rewards, requires massive amounts of computing power and electricity. Advocates argue that placing these facilities on former coal mines gives the land a second life, while also providing the utilities with the power they need. Opponents say that the companies will move when the discounts expire. Environmental groups criticize the industry as a waste of energy.
The Ebon facility, for example, would have used as much as 250 megawatts of electricity, which is nearly as much electricity as Kentucky Power’s Big Sandy Power Plant is capable of generating.
Kentucky has seen a wave of cryptomining due to a series of tax incentives passed in recent years, including exemptions on electricity and property used in commercial mining of cryptocurrencies. The PSC approved a contract between Kentucky Utilities and the company Bitiki for a $25 million cryptomining facility on a former coal mine in Union County. In September, the PSC is expected to release a decision on a proposed electricity rate discount contract between Cyber Innovation Group and Kentucky Power for a facility in Pike County.
