Last fall, Kentucky Utilities (KU) made a deal with Bitiki Build and Develop to create a cryptocurrency mining facility in Union County. The former mine site is now a new facility, receiving an investment of approximately $25 million. As part of this deal, five new jobs are expected in Waverly, Kentucky. The electricity generated by the solar panels could be up to 13 Megawatts, enough to power tens of thousands of households.
The deal was approved by the Kentucky Public Service Commission on Monday and includes discounts for the first five years of the contract. KU estimates that, even after the discount, it will receive nearly $10 million in revenue over the duration of the contract, which will cover some of the fixed expenses paid by ratepayers.
“We are pleased with the KPSC’s approval of our Economic Development Rider contract with Bitiki,” said LGE/KU spokesperson Natasha Collins. “Our EDR was created to attract businesses to establish and expand here in Kentucky and to grow economic development efforts across our service territory, which benefits all of our customers.”
Opponents argue that cryptominers consume a lot of energy and do not provide any economic benefits to local communities. Thom Cmar said there is no evidence Bitiki’s operation was already running, so the discount was not necessary.
“If they don’t actually need the discount, then you’re giving them $4 million of a discount over the first five years of the contract that’s not necessary,” Cmar said.
Cryptomining is when computers perform “proof of work” calculations to reward miners of digital currency, such as Bitcoin. Former coal mining sites are now being used by cryptominers as they can access transmission lines to power their servers. The Kentucky Legislature passed incentives such as exemptions for electricity and tangible property directly used to mine cryptocurrencies commercially with House Bill 230.
Utilities are often willing to give discounts in order to attract another large consumer of electricity. However, cryptomining is not as dependent on the land as steel mills or coal mines, so companies can easily move their servers to another location.
“These facilities are often here today, gone tomorrow,” Cmar said. “They’re essentially warehouses full of computers, the computers are shipped in and plugged into the grid, but there’s a track record of these types of facilities, packing up overnight and going to a different state if they can find a lower electricity price elsewhere.”
They could also go bankrupt due to the volatility of cryptocurrency markets. The Bitiki deal included a $1.275-million surety bond, which acts as a security against default.
Bitiki’s is the first of three large energy contracts with discounts for proposed crypto-facilities currently being reviewed by state utility regulators. In the next few months, the Public Service Commission is expected to decide on similar contracts for two more crypto companies that have plans to expand into Kentucky’s power territorial area in the eastern half of the state.
