Did County Commissioner John Gentle just leak Allrise/Bitmain’s plan to sell the former PNC mill?

Last week the Newport Miner published a feature profiling Pend Oreille County Commissioner John Gentle. Deep on the second page of the story, the Miner reported that, “Gentle said he doesn’t care if Allrise wants to reopen the mill to sell it.”
 
This is what is interesting about that comment:
 
1) It was not a response to a question. Gentle just offered it up out without any prompting. So where did the comment come from?
 
2) Gentle is in a position to know. Gentle and his spouse Kim have been in the Allrise/Bitmain inner circle at least since the beginning of 2021 when Kim began working with current Allrise/Bitmain local executives Monty Stahl and Russ Pelleberg to bring a large crypto project to the county. Both Gentles continue to work closely with Allrise/Bitmain and have used their public offices to advance Allrise/Bitmain’s interests at the expense of county residents.
 
3) It makes sense. The speculative Allrise/Bitmain bitcoin mining venture in Usk has been a financial disaster so far. The collapse of the Bitcoin bubble, the rise in regional wholesale power prices, and other factors have increased Bitcoin mining costs and have made the former PNC mill in Usk a non-competitive site for Bitcoin mining. Allrise/Bitmain could still make a profit on Bitcoin mining—just not in Usk. For example, their other facility in Spartanburg, SC, is likely generating a return on investment around 3x higher than their facility in Usk. And it turns out that “modular data center” shipping containers filled with Bitcoin mining computers are very easy to move.    
 
4) The timing fits. There are two events coming over the next six months that could easily trigger an exit by Allrise and/or Bitmain from Bitcoin mining in Usk. The first event is the expiration of their current power contract with the PUD in September. An increase last year in average market power prices have left Allrise/Bitmain are struggling to pay their bills under their current power contract.  Most months they have not been able to afford enough electricity to turn on all of their Bitcoin mining computers. If they can’t get substantially reduced power prices in a new contract, Allrise and Bitmain may move the mining computers to other locations where they can operate profitably. The biggest challenge to the kind of power contract Allrise/Bitmain needs is that it would require the PUD’s other 9,600 customers to both assume enormous financial risk and subsidize Beijing’s Bitcoin mining through higher power rates for the rest of us.
 
The second event is a possible contract deadline between Allrise and Bitmain. Sources familiar with the contract between Allrise and Bitmain have reported that Bitmain would transfer ownership of the mining computers to Allrise after the facility had generated enough bitcoin to pay off Bitmain’s initial investment (which was between $200-300 million in market value). They have also reported that this repayment was supposed to have taken one year—which was reasonable given that the facility’s expected first year income was $300-500 million when Allrise and Bitmain partnered together in Fall 2021. The facility will complete its first year of full operational capacity in August and the bitcoin generated by the facility will not have returned even one-tenth of the initial investment value.  Bitmain may find Allrise in breach of contract, cancel its partnership with Allrise, and unilaterally move their machines to greener pastures with new partners who did a little more due diligence.
 
5) A Paper Mill just isn’t Allrise Capital’s thing. Allrise Capital is a small venture capital and investment property holding company. Like other venture capital companies, their business model (which hasn’t been too successful) is based on investing in short-horizon projects that can be cashed out for a profit after a few years. Operating a paper mill is a long-horizon project with little to no short-term financial return. Profitability comes only after many years of successful operation. Given that many other paper companies evaluated the potential profitability of the mill in 2020 and universally passed on the opportunity to purchase it an enormous discount and that the business conditions for paper mills of all types have only gotten worse since the PNC bankruptcy, it is questionable whether the Usk mill could ever be profitable again. Furthermore, Allrise has no corporate experience in the paper industry or operating a large industrial plant. Only four former mill employees remain on Merkle Standard’s payroll.  
 
To be sure, Allrise’s six local employees at Merkle Standard appear to be working frantically to shape the conditions to save their jobs by trying to convince the PUD’s citizen owners that mining Bitcoin for Beijing is worth higher utility rates for the rest of us. But it is unclear whether Allrise’s and Bitmain’s higher-level corporate officers are as committed to staying in Usk.