In Blow to Beijing's Bitcoin Operations, State Legislature Passes HB1416-- will compel Usk crypto mine to use clean energy (like they promised to do)

In a blow to Beijing Bitmain's and Allrise Capital's bitcoin mining business at the former PNC paper mill in Usk, WA, Washington State's legislature passed House Bill 1416 on April 12 with a 30-19 floor vote in the Senate. The House passed the bill on February 9 with a vote of 58-39. 

The legislation will require the Bitmain/Allrise joint venture to transition to using clean energy. This will result in a slight increase in the price of electricity they use, but because the cost of electricity is the only significant input in their business, it will have an outsize impact on their bottom line compared to manufacturing or industrial uses. To understand how power prices impact Bitmain/Allrise's bitcoin business, read our previous report: POC Cryptonomics - PROTECT PEND OREILLE

HB1416 closes a loophole in the State's 2019 Clean Energy Transformation Act (CETA) that allowed industrial customers of some utilities in the state to purchase non-CETA compliant power. Our PUD was one of these utilities and Bitmain/Allrise exploited that loophole to purchase non-CETA compliant electricity at discounted rates on the market because they did not want to pay the small difference in price for power from sources specified as being clean energy.  This was despite publicly claiming to be committed to using clean energy and even falsely advertising on their website that they were using hydro power. 

We assess that Bitmain/Allrise will increase its efforts, directly and indirectly through its surrogates in the County EDC and County Commissioners office, to pressure our PUD into subsidizing their power rates at the cost of millions of dollars to the other businesses and residents of the county. See our previous report on some of the damaging policies that Bitmain/Allrise are pressuring our PUD to adopt: What's at stake? Crypto plans in power negotiations would cost Citizens of POC millions, throttle local economy - PROTECT PEND OREILLE

The bill was introduced and passed at the request of the State Department of Commerce. When testifying on behalf of the bill, the head of the state Energy Policy Office, Glenn Blackmon, specified Bitmain/Allrise's massive bitcoin mining facility in Usk as the prime example of why the state needed to close the CETA loophole with HB1416.

Although many aspects of the CETA may be sub-optimal policy choices, given that it is already the law of the land, HB1416 will actually benefit the businesses and residents of Pend Oreille County (with the single exception of Bitmain/Allrise). See our previous report: HB1416 - PROTECT PEND OREILLE

In February local crypto executives claimed that HB1416 posed "an existential threat" to their business and mobilized their surrogates to conduct a misinformation campaign in hopes of defeating the bill. See HB1416 - PROTECT PEND OREILLE.

These included County Commissioner John Gentle who admitted he was lobbying state legislators on behalf of Bitmain/Allrise. See Gentle Admits He is Lobbying for Bitmain and Allrise - PROTECT PEND OREILLE

These also included a west-side consultant/lobbyist friend of the Gentles, Mr. Tim Zenk, who relayed Bitmain/Allrise's request for a "Cascade" amendment to the bill (likely a reference to their joint venture LLC Cascade Digital Mining) that would protect their bitcoin mining operations from needing to pay for clean energy while costing Pend Oreille residents and businesses millions of dollars. See: Zenk Letter - PROTECT PEND OREILLE.

According to the Department of Commerce, "The law requires utilities to phase out coal-fired electricity from their state portfolios by 2025. By 2030, their portfolios must be greenhouse gas emissions neutral, which means they may use limited amounts of electricity generated from natural gas if it is offset by other actions. By 2045, utilities must supply Washington customers with electricity that is 100% renewable or non-emitting with no provision for offsets." CETA Overview - Washington State Department of Commerce

​While the bill will not fully impact Bitmain/Allrise for another year and a half, it changes the calculus for future investment in the site, the future of which is already uncertain. See: Did County Commissioner John Gentle just leak Allrise/Bitmain’s plan to sell the former PNC mill? - PROTECT PEND OREILLE

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