|
In June we reported that rising power futures prices could hasten the inevitable bankruptcy for Beijing's Bitmain's and Vladimir's Allrise Capital's massive bitcoin mining facility at the converted former PNC paper mill. Since then, the situation has only gotten worse for the crypto facility-- much worse. We previously reported that Bitmain/Allrise would not be able to turn on their bitcoin mining machines, which consume more than three times the electricity as the rest of the county put together, in July, August, and September because the cost of the required electricity would exceed the value of the bitcoin the facility could produce. More recent prices for power futures now indicate that Bitmain/Allrise will not be able to afford to purchase market power for their facility from July through next February or March. That is eight consecutive months of no or limited revenue generation. See our previous reporting here: Harbinger of Insolvency: High prices for market power futures may hasten Bitmain/Allrise bankruptcy - PROTECT PEND OREILLE The breakeven point, or the maximum price the Usk facility can pay for the electricity (and no other operating expenses), at the current Bitcoin value of around $29,400 is around $100-110 per megawatt hour of electricity. The chart below of current futures prices for electricity (eg the cost to purchase electricity now for use in a future month) currently ranges from $155 in September to $98 in February.  In addition, next April the breakeven point will fall to the point Bitmain/Allrise will not be able to afford power at $50-60 per megawatt hour instead of $100-110. It is unlikely that Bitmain/Allrise will be able to continue bitcoin mining operations after that point. Saddled with huge debts and unrecovered investments, they will likely need to declare bankruptcy.
Bitmian/Allrise purchases their electricity in one-month blocks one month in the future. By the end of the first week of each month, they must purchase all of the power they plan on using for the following month. The price they pay for this electricity is typically the futures price on the day they make their order. For example, to get power for September, Bitmain/Allrise will have already ordered and paid for their power from our PUD. They typically need around 53,280 megawatt hours of electricity a month to run their facility at full capacity. At the current futures rate of $155 per megawatt hour, this would cost them around $8.3 million (plus taxes and delivery fees). However, at full capacity the facility can only earn around 6 bitcoin per day (180 for September) which would only produce $5.4 million in revenue resulting in a loss of $3 million for the month-- and that's only accounting for electricity so their actual loss when other operating expenses and debt repayments are accounted for is much higher. Bitmain/Allrise may be able to operate at greatly reduced capacity in October through February with any leftover electricity our PUD has after meeting its customers' needs, but this limited production will not produce the revenue needed to pay off the over $100 million (and as much as $300 million) initially invested in the facility. Given the ever-increasing financial risk to our community posed by crypto mining, it is essential that our PUD management and commissioners maintain the policies implemented to protect the citizens and ratepayers of this county from another round of double-digit electricity rate increases. Our PUD needs to keep prioritizing the best interests of Pend Oreille County ahead of Beijing's.
0 Comments
Leave a Reply. |