Pend Oreille County simply a bad location for industrial Bitcoin mining

​One of the critical reasons that Beijing Bitmain’s and its junior partner Allrise Capital’s Bitcoin mining facility in Usk is struggling financially is that Pend Oreille County is simply a bad location for industrial-scale crypto mining. Here are four reasons why:
 
1) Power Infrastructure. As Bitmain/Allrise have already discovered, the county does not have the infrastructure to support large-scale bitcoin mining. Bitmain/Allrise isn’t the first to learn that lesson. HiTest Sand also found that the county’s infrastructure couldn’t support the 210 MW load they required. Expanding the infrastructure would cost tens to hundreds of millions of dollars and take years to complete.
 
2) Power Costs. The Pend Oreille PUD effectively has a two-tier price structure for industrial customers. The PUD can service its normal-sized industrial customers in the county with its own power resources, but because Bitmain/Allrise’s requirements are more than three times the rest of the county well beyond the PUD’s native resources (even counting Box Canyon Dam), they have to purchase power from outside the county. The price of this “market power” has been 3-5 times higher than most industrial Bitcoin miners pay.
 
3) Time horizon. Bitcoin mining is a short-term business. PUD’s (and not just our PUD) are long-horizon businesses. PUD’s deliver the best pricing when they can make long-term, predictable power purchases. Bitmain/Allrise’s would like to make day-ahead power purchases to best match volatile power prices with volatile Bitcoin prices, but our PUD simply cannot provide that kind of power contract.
 
4) Risk. Bitcoin mining is an EXTREMELY high-risk business not far from a gamble. It single-handedly dwarfs the rest of the PUD’s risk pool. As a citizen-owned public corporation, our PUD focuses on minimizing risk for its owner-ratepayers. The PUD’s prudent risk-management practices constrain the service options available to crypto miners.