BOISE (Idaho Statesman) – Cryptocurrency miners are flocking to Idaho for its cheap energy. According to the state authorities, the additional energy requirement puts a strain on the entire power grid.
In fact, Idaho Power has asked the Idaho Public Utilities Commission to create a new client class for large crypto miners, said Jordan Rodriguez, a spokesman for Idaho Power.
The new classification was approved in June, according to a PUC spokesman, but a Puerto Rican crypto mining company called GeoBitmine requested a reconsideration. The PUC is now accepting comments on this petition.
“These customers have the potential for significant energy demands that could result in Idaho Power building additional infrastructure,” Rodriguez said over the phone.
GeoBitmine, in its argument for a reconsideration, said that the new class of customers was discriminatory and would halt their plans to develop a crypto mining operation at a disused JR Simplot Co. potato processing facility in Aberdeen that would use waste heat for year-round greenhouse cultivation. A University of Idaho research and advisory center planned to use the farm for seed research.
Both crypto mining and indoor farming would consume a constant 6 megawatts of electrical load, the petition said. However, GeoBitmine argues that the tariffs and terms of service that would apply under the new classification “make it impossible to proceed with the joint venture” due to potential power outages.
“The power outage during the hottest part of the day during the hottest months of the year will be catastrophic for indoor food production, potato storage and seed research facilities,” the company said.
CRYPTO MINING COMPANY CALLS CLASSIFICATION DISCRIMINATORY
It also said the classification would force ratepayers to suffer provisions not imposed on any other class of customers in Idaho Power’s system.
“It is black letter utility law that the commission may not approve tariffs and utilities may not charge fees that favor customers or discriminate against some customers in favor of other, similarly situated customers,” GeoBitmine said in its petition.
Rodriguez said the increased demand due to crypto mining operations could require new substations, lines, transmission resources and power plants. The cost of these assets is paid by all customers in installments over time.
Adding new infrastructure could increase electricity prices for everyone. If the crypto miners packed up and left the state, the remaining costs would be left behind and Idaho Power’s remaining customers would foot the bill.
And given the volatility of the crypto industry, it’s unclear how long these miners will continue to exist.
“What we don’t want is a bunch of speculative loads coming online in a short period of time that would potentially require us to go out and build new resources or buy a lot of energy to meet demand,” Rodriguez said.
The new classification for industrial crypto miners would apply to operations that draw less than 20 MW. According to Rodriguez, 20 MW is enough to power around 15,000 homes. Anything larger falls within an existing classification with commission oversight.
The PUC divides customers into classes based on how they consume electricity, including home users, small businesses, larger commercial operations, irrigation companies and farmers.
Crypto miners operate powerful computers that run complex mathematical equations, often around the clock, to mine or create digital currencies.
CURRENT A HIGH COST FOR CRYPTO-MINERS
Mike Louis, engineering program manager for the PUC, said electricity is a major expense for any crypto mining operation.
“There’s an incentive for them to chase the cheapest electricity,” Louis told the Idaho Statesman over the phone. “And since they don’t have other infrastructure holding them in that location, as is typical for other customers, they are placed in a class where there is a need to protect against lost assets.”
To date, most crypto miners in the state are hobbyists working out of their basements or garages, according to Rodriguez. These people would not be affected by the new customer class.
“It’s unlikely that a private individual would mine enough to have this large impact that could force us to build additional infrastructure,” Rodriguez said.
Idaho Power currently has no customers who would fall into the new class of customers. While there are some customers mining crypto as part of residential or small general rosters, he said, Idaho Power can’t say how many. But the utility says it has “received interest from customers proposing approximately 2,000MW of potential cryptocurrency mining operations.”
The utility says it has some of the lowest energy prices in the country, about 30% lower than the national average, with variations by customer class.
Idaho also has minimal risk of natural disasters that can disrupt data centers or other large buildings containing servers, computers, and other equipment.
“It is considered a low-risk location to conduct these operations,” Rodriguez said. “It’s also a relatively inexpensive energy location compared to operating in California.”
Idaho Power is already seeing increasing demand thanks to significant population growth over the past decade. Excessive heat and fire activity also stresses the network.
IDAHO POWER WOULD SHUT OFF CRYPTO MINING DURING PEAK DEMAND
One of the two most important parts of the utility’s request to the PUC is the ability to shut down crypto mining operations during periods of peak energy demand to avoid shutdowns for Idaho Power’s remaining customer base. Heatwaves are the prime example of a time when the system is near capacity, Rodriguez said.
“It’s something we’re keeping a close eye on,” he said.
The second important part is the power to charge crypto miners a “marginal rate” for any additional electricity Idaho Power has to buy or generate for them. Marginal interest rates are usually higher than base interest rates.
A report published on September 8th, on behalf of the Biden administration details the carbon footprint of digital assets. The report warned that crypto-related power consumption could hurt efforts to reduce greenhouse gas emissions.
According to the report, the US hosts about a third of the world’s crypto operations. They consume an estimated 0.9% to 1.7% of the country’s electricity consumption.
“Some crypto-asset technologies currently require a significant amount of electricity for the generation, ownership and exchange of assets,” the report states. “Depending on the energy intensity of the technology used, crypto assets could hamper broader efforts to achieve net-zero carbon emissions consistent with US climate commitments and goals.”