County Commissioner Robert Rosencrantz proposed a Clean Energy Strategy for Pend Oreille County during the commissioners' meeting on Monday, April 3. Rosencrantz, who represents the county's second district, listed a dozen "Guiding Principles" and a number of key goals for the county. The Guiding Principles are: 
​
1. Grow Pend Oreille County’s economy and increase living-wage jobs
2. Establish Pend Oreille County as a hub for clean energy technology and innovation
3. Create pathways that direct our natural resources toward desired goals and outcomes
4. Ensure affordable, clean energy for the residents and businesses of Pend Oreille County
5. Work collaboratively with our Public Utility District
6. Work collaboratively with the Kalispel Trible of Indians
7. Work collaboratively with stakeholders and community groups
8. Minimize energy costs for the residents and businesses of Pend Oreille County
9. Protect our natural environment and the Pend Oreille River ecology
10. Promote the expansion of a reliable local power grid in support of future growth
11. Create partnerships with companies such as TerraPower
12. Use taxpayer resources wisely

You can download and read the complete four-page strategy document below. 

Rosencrantz presented his strategy proposal during a meeting with a subcommittee of the county's Economic Development Council (EDC) that describes itself as a "Clean Energy Coalition." In previous meetings, Rosencrantz asked the subcommittee members what strategic vision they were working toward. After they replied that they had no strategy or vision, Rosencrantz created one for them. During the meeting he emphasized that the "Coalition" was not representative of stakeholders in the County and asked them to incorporate a broader representation of the County to include our PUD, the Kalispel Tribe of Indians, and other civic groups and nonprofits already focused on clean energy. He emphasized the importance of working collaboratively with our PUD and that the county should be careful not to waste resources on reinventing the wheel.

During the meeting, Ms. Kim Gentle, spouse of County Commissioner John Gentle and the leader of the subcommittee, challenged Rosencrantz when he stated that the PUD was prepared to meet the County's needs for clean energy. Gentle argued that the PUD was not. Both Ms. Gentle, who has had on-and-off business partnerships with Allrise/Bitmain's local executives over the last two and half years, and her husband have been active surrogates for the crypto company. As we previously reported, we anticipated local surrogates to continue misinformation campaigns directed against our PUD intended to discredit the PUD and pressure them to break their county-benefitting contract with the Clark County PUD. This episode matches our earlier assessment and calls into question the actual goals of the "Clean Energy Coalition."

The fact that Ms. Gentle has also publicly asked her husband in his capacity of County Commissioner to provide large amounts county funds to her organization is another troubling conflict of interest, especially when County Commissioner John Gentle not only asked his fellow commissioners to approve the funding but argued that the Commissioners should not exercise close oversight over the "coalitions" activities or expenditures.

County Commissioner John Gentle also used the meeting to advocate for bitcoin mining. When coalition members asked him how he would like to spend any clean energy grant money they might get, Gentle responded that the county should invest it in supporting the bitcoin mining industry. "Specifically, on like the crypto conversation, I'll never own a bitcoin," he stated, "but I'd sure like to be the guy making the racks that the guys that are farming bitcoin. I'd like to be the manufacturing to supply them."

Download Commissioner Rosencranz's County Clean Energy Strategy here: 

Cascade Digital Mining, the LLC representing the bitcoin-mining joint venture between Beijing's Bitmain and Allrise Capital, recently began negotiations with our PUD for a new power contract to take effect in October. The stakes for the residents and businesses of Pend Oreille County are enormous.

If Allrise/Bitmain get their way, residents and businesses will face substantially higher power rates, our citizen-owned PUD will risk financial insolvency, and the county's economy will be throttled. 

Based on records describing their previous negotiations obtained through public records requests and public statements and actions, it appears that Allrise/Bitmain will be seeking at least three major changes to their existing contract that would be disastrous to our PUD and its citizen-owners.

1. They want our PUD's other customers to subsidize their electricity by transferring part of the cost of purchasing their higher-priced market power to all PUD customers.
2. They want our PUD's citizen-owners to accept and pay for the risk collateralization of their high-risk business,
3. They want to nullify our PUD's lucrative and highly beneficial long-term contract with Clark County PUD for the output of our Box Canyon Dam and force our PUD to sell them the power at a monetary loss to its citizen-owners.

Allrise/Bitmain do not want and cannot afford a long-term contract with our PUD, but desperately needs the lower power costs that such a contract would offer. So, they have adopted a bait and switch strategy by invoking the financially impractical and effectively infeasible restart of the former PNC paper mill. By combining the mill siren song with misinformation campaigns by their local surrogates seeking to discredit our PUD, they hope to manufacture public pressure they can leverage against our PUD's management and commissioners to accede to a power contract that would otherwise be imprudent and unreasonable.

Let's examine each of these changes.

1. Subsidizing Beijing's Bitcoins. As we previously reported here: PUD Industrial Policy protects low rates for residents and businesses, Does NOT hurt economic growth - PROTECT PEND OREILLE, because Allrise/Bitmain's power requirements are more than three times the rest of the county combined and far exceed our PUD's own electricity resources, our PUD must purchase enormous quantities of electricity for sources outside of the County. Because Allrise/Bitmain neither wants nor can afford a long-term contract, this power is purchased on a month-ahead basis on the volatile Mid-Columbia Hub market. Since Allrise/Bitmain began large-scale bitcoin mining last September, these prices averaged more than 14 cents per kilowatt hour (compared to the 6.34 cents PUD residential customers currently pay). Our PUD requires that Allrise/Bitmain (and any other equally needy potential customer) pay for the extra cost involved in purchasing this power for their exclusive use instead of averaging the cost among all its customers-- which would raise rates for everyone else. Allrise/Bitmain is currently conducting a misinformation campaign through its local executives and surrogates who are claiming that our PUD's policy for its large industrial customers may be constraining economic growth in the County. See the report linked at the beginning of this paragraph to see why that is not the case. 

2. Get citizens to pay for the risk. Just in case you have been living in a hole for the last year, Crypto is a high-risk industry and Allrise/Bitmain's recent fortune (or more accurately their lack of a recent fortune) is representative of the risk. However, the combination of crypto and Allrise Capital is even higher risk. During negotiations last summer, Merkle CEO Steve Wood complained the about having to obtain a $16 million performance guarantee that would protect our PUD's citizen owners against default, even though as former CFO of the PNC mill, Wood was intimately aware of how the mill's inadequate risk collateralization saddled the residents of Pend Oreille County with $22 million in debt that triggered large rate increases for customers. And Allrise's financials have likely worsened since last summer as most of their investments plummeted in value. At the public PUD meeting on March 7, Allrise/Bitmain local execs begged our PUD for a 50 percent reduction in their risk collateral. Fortunately, our PUD declined such a large decrease because less than a week later, Allrise/Bitmain failed to make their power payment after the top three crypto-servicing banks in the US, including Allrise's servicer, Silicon Valley Bank, failed within one week. 

3. Box Canyon for Bitcoin. Allrise/bitmain is seeking to nullify our PUD's lucrative and beneficial contract with Clark County PUD for the future output of the Box Canyon Dam. This contract will bring as much $400 million dollars into Pend Oreille County over its fifteen years and will protect the financial position of our PUD, which is essential to low rates for customers, maintaining and expanding our reliable electricity grid, and providing help to our neighbors in need. The contract is equivalent to a 15-year annuity that is low-risk, adjusts for inflation, and returns a 10 percent profit on top of the full cost of running Box Canyon Dam each year. Giving up millions of dollars each year in exchange for more bitcoin for Beijing and flimsy, ambiguous commitment to maybe, sometime think about restarting an unprofitable paper mill would be an unwarranted gamble of epic proportions.

Within a week of signing their current power contract last August, Allrise/Bitmain discovered that the gamble they had made on three cent per kilowatt hour market prices had not rolled a seven. Even though they had just conducted three months of negotiations without mentioning any power for paper, they suddenly discovered they could reopen the paper mill by November, but only on the condition that our PUD agree to provide them with discounted power from our Box Canyon Dam. The mill restart proposal was an obvious gambit to get cheaper power for Bitcoins, not for paper. In October, Bitmain/Allrise executives travelled to Vancouver, WA, and demanded that the Clark County PUD cancel its pending contract with our PUD for Box Canyon on the false grounds that the crypto crew had not been informed about the pending contract. See PUD Documents Show Allrise/Bitmain Misleading Public about Box Canyon Deal - PROTECT PEND OREILLE In February, they hired a lobbyist who tried to sell legislators on an bitcoin-exempting amendment to HB1416 that would have nullified our PUD's contract with Clark and compelled it to sell Box power at a discount for Beijing's bitcoin miming.  

Allrise/Bitmain's bitcoin mining in Pend Oreille County has been a financial disaster so far. Their local executives in Cascade Digital Mining and Merkle Standard are becoming increasingly desperate. Look for the situation to explode into a publicized show-down in the coming months. 

For more details: 

About the papermill: PROTECT PEND OREILLE - Home
Bitcoin economics in Pend Oreille County: POC Cryptonomics - PROTECT PEND OREILLE
Box Canyon Dam and Bitcoin Mining: Box Canyon - PROTECT PEND OREILLE

Beijing’s Bitmain and Allrise Capital’s bitcoin-mining joint venture LLC, Cascade Digital Mining, recently began negotiating with our PUD for a new electrical service agreement to replace their current contract, which expires this September. One of the points of contention that Bitmain/Allrise will likely seek to publicize is our PUD’s current policy governing how it provides service to industrial customers.
 
The key points of this report are:

1. Our PUD’s current policy for industrial customers protects the residents and businesses of Pend Oreille County from paying higher electricity rates to subsidize energy-intensive, high-risk, short-horizon corporations that are unable or unwilling to make long-term investments in the county.
2. Our PUD’s current policy for industrial customers does NOT penalize large, financially healthy corporations that are able and willing to make long-term commitments in Pend Oreille County.
3. Our PUD’s current policy for industrial customers does NOT limit economic growth.

 
Our PUD’s current policy for industrial customers effectively creates two tiers of service for industrial customers. The first tier is industrial customers requiring less than 2 megawatts of electricity. Our PUD has sufficient electricity from its share of Seattle Power and Light’s Boundary Dam and its block of power from the Bonneville Power Administration to serve these customers with low-cost, clean energy from its own resources. Except for Beijing Bitmain’s/Allrise Capital’s Bitcoin mining facility at the former PNC Papermill in Usk, all other industrial customers in the county fall into this category.
 
For a more detailed explanation of how our PUD gets its electricity, read: Box Canyon - PROTECT PEND OREILLE
 
The second tier is for industrial customers requiring more than 2 megawatts of electricity. The 100-megawatt Bitmain/Allrise bitcoin facility is the only customer in this category. This facility requires more than three times the amount of electricity as the rest of our PUD’s 9,600 industrial, commercial, and residential customers combined. This amount of electricity far exceeds our PUD’s resources, so to meet the needs of Beijing’s voracious Bitcoin Mine, our PUD must purchase large amounts of electricity on the Mid-Columbia Hub market. Over the last year the price of this “market” electricity has been significantly higher than the cost of our PUD’s own electricity.
 
Our PUD’s current policy for industrial customers requires Bitmain/Allrise to be solely responsible for paying for the additional cost of this market power. If this policy did not exist or is changed, the responsibility for paying the additional costs for Beijing’s Bitcoin Mining would be shifted onto the PUD’s other customers. Because the amount of electricity required is so large, this cost-sharing would result in substantially higher power bills for the county’s residents and businesses. Fortunately, as a citizen-owned public corporation, our PUD has consistently recognized its primary responsibility is the interest and well-being of its resident owners.
 
Local executives from Bitmain/Allrise and their surrogates have argued that our PUD’s two-tiered policy limits economic growth in the county. This claim is false. There are many reasons why, but there are two most relevant to this report.
 
First, the primary reason why Bitmain/Allrise have to pay higher rates is that they do not want and cannot afford a long-term financial commitment to our PUD and to our county. To understand why Bitmain/Allrise do not want a long-term contract for the Bitcoin mining business, read our report on the economics of Bitcoin mining in Pend Oreille County here: POC Cryptonomics - PROTECT PEND OREILLE
 
After Bitmain/Allrise failed a due-diligence review of their finances conducted by the prospective power provider, Brookfield Renewable Inc., last fall, they were offered a longer-term power contract at lower power rates by our PUD. They turned it down. Instead, Bitmain/Allrise asked for a short-term contract under which they would purchase power monthly. This contract, which they requested instead of a longer-term, fixed contract, exposed them to higher market prices. Even this short-term contract was a financial challenge for them to meet. In an email from Mr. Wood to Mr. Willenbrock dated June 27, 2022, Mr. Wood complained that “securing $18 million in Performance Assurance is a significant financial undertaking….”
 
Last October, our PUD again asked Allrise’s CEO if they could afford a long-term contract. General Manager Collin Willenbrock wrote to Merkle Standard CEO Steve Wood, “[On] September 26 2022, I met with you and Mr. Trubchik [Allrise Capital’s CEO] at the District offices to discuss your plea to deviate from the requirements of the ESA just two weeks after execution because apparently your models were inaccurate. During that meeting… I specifically asked if Allrise would even have the ability to collateralize a deal of that magnitude and Mr. Trubchik indicated that he didn’t believe so.”
 
The key point here is that an established, financial healthy corporation with a longer-term business plan would be able to secure a long-term power contract for large quantities of CETA-compliant with our PUD at rates comparable to our PUD’s rate for smaller industrial customers. Bitmain/Allrise is not interested in this type of contract because their business plan is short-term, and they do not have the financials or credit worthiness to get such a contract.
 
So, our PUD’s two-tier policy for industrial customers does not prevent lower-risk, financially healthy industrial customers interested in a long-term commitment from accessing clean electricity at competitive prices. That is precisely the type of businesses we want to move into Pend Oreille County.
 
Second, contrary to the claims of Beijing’s Bitmain local representatives and surrogates, our PUD’s policy actually promotes economic growth. By keeping rates for its customers low, the policy incentivizes small- and mid-sized businesses seeking low-cost, clean power to come to Pend Oreille County (something that would change if the residents of the county had to subsidize industrial bitcoin mining).
 
It is also important to remember that an industrial customer can do a lot with 2 megawatts of power. Data from the US Energy Information Administration and the Census Bureau shows that these other industrial customers use less than 8 percent of the electricity but provide more than 20 times more jobs. You can create a lot of jobs with 2 megawatts of electricity. And our PUD can fully support at least 2 percent annual growth through the next two decades. This is many times higher than our historical annual growth rate. Our PUD has the electricity to resource many more Vaagen Lumber-sized enterprises. (NOTE: the limits on our county’s transmission lines and substations maxed out by the many crypto mining companies operating in the county is a more significant limitation on growth than limits on our PUD’s electricity resources).

Last Friday, the State Senate ​Committee on Environment, Energy & Technology cleared House Bill 1416 for a floor vote and recommended 5-2 that the Senate vote to pass the bill. HB1416 closes a loophole in the Clean Energy Transformation Act that enables Bitmain/Allirse to purchase electricity from high-pollution sources for their Bitcoin mining operations in Pend Oreille County. Bitmain/Allrise local crypto executives have publicly described the bill as an "existential threat" to their future business operations because it will force them to purchase clean energy at a slightly higher cost (a fraction of a cent per kilowatt hour).  But at a time when it already paying between $15,000 and $23,000 in electricity for each Bitcoin they are able to win (depending on the variable price of electricity), that small margin will have an oversize impact on their already sagging bottom line. For more one Bitmain/Allrise's struggling financials, read here: POC Cryptonomics - PROTECT PEND OREILLE

In contrast to Beijing Bitmain's and their partner Allrise Capital's plight, HB1416 will economically benefit the other 9,600 customers of our citizen-owned PUD. Every other industrial, commercial, and residential customer in Pend Oreille County already uses CETA-compliant electricity. Only Bitmain/Allrise do not.  HB1416 will help ensure that our PUD can deliver low electricity rates to its current and future customers. It will also incentivize small- and medium-sized businesses to locate to the county to take advantage of low-cost, clean energy provided by our PUD. Our PUD can easily support many more Vaagen Lumber-sized business in our County with its current power allocation from Boundary Dam. Read more here: HB1416 - PROTECT PEND OREILLE

Bitmain/Allrise, assisted by County Commissioner John Gentle, lobbied State legislators to not pass the bill or to add a "Cascade Amendment" (likely are reference to Cascade Digital Mining) that would have compelled the residents and businesses of Pend Oreille County to subsidize Bijing's bitcoin mining in the county-- which would have cost residents millions of dollars each year.  Read more here: Zenk Letter - PROTECT PEND OREILLE

Several residents of Pend Oreille County gave testimony asking members of the Committee to pass HB1416 as is and not to support Bitmain/Allrise's proposed Bitcoin amendment. One of witnesses was Newport resident Gloria Jean Wells. Ms. Wells moved to Pend Oreille County after working as a state civil servant for 32 years. She began her career at the Washington State University College of Pharmacy and concluded as a Support Enforcment Officer. She and her husband love Pend Oreille County for its rural living, clean rivers and lakes, open space, and abundant wildlife. Here is her testimony: 

Good morning and thank you for the opportunity to speak to you about why I support HB 1416.
​
Paper mills have been rapidly closing across the nation. Good example is the former papermill in Pend Oreille Co. The current owners are foreign investors-Allrise/Bitmain, which is Incorporated in Cayman Islands (resource is Wash. St DOR tax information).

Please vote yes on HB 1416 because it will protect Pend Oreille County residents from subsidizing Allrise/Bitmain, which is a bitcoin foreign currency corporation; protect wildlife, farm animals, environment, energy, etc. 

Allrise/Bitmain should be required to develop better ways to bring more environmentally friendly energy, not use Pend Oreille County limited natural resources.  As you know, Bitcoin consumes excessive electricity per transaction, doesn't benefit residents of Pend Oreille County or Washington State, doesn't create jobs, is a high-risk business, it's not regulated, we have heard that people have lost their entire life savings by deposits disappearing, etc.

I thank you for having this public hearing, please vote “yes” on HB 1416.

The Vietnam War Veterans Recognition Act of 2017 officially designated March 29 as National Vietnam War Veterans Day. 

According to the American Legion: "This is a time to pay special tribute to the 9 million Americans who served during the Vietnam War era, to the 58,000 names memorialized on the Vietnam Veterans Memorial in Washington, D.C., and to those who never received the recognition they deserved when they returned to America from war. March 29, 1973 is the day U.S. Military Assistance Command, Vietnam was disestablished and the day the last U.S. combat troops departed Vietnam. In addition, on and around this same day, the U.S. Vietnam War Commemoration stated that Hanoi released the last of its acknowledged prisoners of war."

Our County is the proud home of approximately 1,400 Veterans. Half of these Veterans served during the Vietnam War.  Approximately one third of the Veterans in our County bear the life-long burden of a disabling medical condition due to their service to Our Nation.

We at Protect Pend Oreille want to thank those who served during the Vietnam War for protecting us.  Your Service made a difference. 

The passage of time brings new perspectives of our past. Modern historians of the Cold War now remind us that the Vietnam War played a vital role in the generational conflict between freedom and oppression that we call the Cold War. Your courage and fortitude marked a line around the globe behind which more than half of the peoples of the world living on the western side of the Iron Curtain could prosper in peace and ever-increasing freedom. The peoples of East Asia, Europe, and the United States of America owe you a debt of gratitude for the lives we live today. 

Thank You. 

Last Tuesday, our PUD revealed that Cascade Digital Mining, the Bitcoin joint venture LLC between Beijing’s Bitmain and Allrise Capital, had missed its monthly payment. The PUD was forced to issue a Letter of Default to Allrise Capital (Allrise is the guarantor of the payment).
 
Cascade missed its payment due to the collapse of Allrise’s banking institution, Silicon Valley Bank, collapsed along with Silvergate and Signature Bank. These banks were the top three American crypto banks providing banking services to high-risk crypto companies. Silicon Valley Bank was taken over by the Federal Deposit Insurance Company (FDIC), which saved Allrise’s money. Still, they will need to find a new bank at a time when banks are increasingly wary of crypto customers.
 
While the residents of Pend Oreille County, who own the PUD, were able to eventually get their money from Cascade and Allrise, the default will likely have serious ramifications.
 
1) The default positively affirms the risk management policies our PUD put in place last summer to protect its citizen owners/ customers from the significant financial risks industrial crypto mining poses to our county. These included prudently rejecting Silicon Valley Bank as the financial guarantor in case Cascade or Allrise failed to make a payment.
 
2) The default will hurt Cascade’s negotiating position for a new electrical service agreement with our PUD. Ominously, Cascade began its first day of negations by failing to make its power payment. Not a good look, especially since one of the main points of contention between our PUD and Cascade/Allrise is our PUD’s reasonable risk management requirements. The current negotiations are for a new agreement to begin next October. Just two weeks before defaulting, Cascade begged our PUD to reduce by half the monetary obligation of their “Performance Guarantee” (basically like a bond—an open letter of credit from a major bank that the PUD can draw on for payment should Cascade/Allrise default). Fortunately, our PUD declined such a considerable reduction.
 
3) The default could significantly increase the level of risk for our PUD in providing power for crypto mining. After the triumvirate of crypto bank collapses, the FDIC, Treasury Department, Federal Reserve, and Biden Administration have sent clear signals to other US banks about the risks of crypto customers. For example, last week the FDIC blocked New York Community Bancorp from taking on any of Signature Bank’s crypto customers as a condition of the sale when they purchased the failed crypto bank after it was seized by the FDIC two days after Silicon Valley Bank. According to the Wall Street Journal and other financial news sources, crypto customers from the three failed banks are having difficulty finding new banks willing to accept the inherent risk of crypto customers. This could leave Cascade and Allrise without access to financial services and credit.
 
4) The default is another indicator of the deterioration of Allrise Capital’s finances since the power provider, Brookfied Renewable Inc, rejected them as a customer last May after conducting a due-diligence review. For a more detailed assessment of Allrise's struggling financial condition, see the letter "Misrepresentations and Omissions of Fact by Ponderay Industries LLC" Section III.e here: https://protectpendoreille.org/uploads/1/4/1/5/141595600/ponderay_industries_evergreen_grant_misrepresentations_and_omissions.pdf

​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.

Crypto mining is hurting Pend Oreille County. Like every other rural community targeted for exploitation by foreign crypto companies, the economic benefits promised to Pend Oreille County have proven to be as tangible as Ethereum. Meanwhile, local bitcoin mining has become a vice crushing the future prosperity of our county.

First, the crypto mines in Usk and along the Highway2 corridor have maxed out the existing power infrastructure preventing any other potential uses for significant manufacturing or industrial development. 

Second, converting the former PNC mill into a crypto mining facility is drastically shrinking county tax revenues with nascent consequences for the county’s budget. Crypto Bro claims of large tax payouts always omit that very few of those tax dollars are for Pend Oreille County. The conversion of former PNC Mill into a massive crypto mining facility has destroyed the value of the site. Two years ago, the PNC mill site's owners paid almost $600,000 in property taxes. This year the owners will pay 76% less ($145,000) at a time when everyone else is paying higher property taxes. In 2022 the county received only a fifth of the Sales and Use Taxes than the market value of machinery operating in Usk facility should have required. Furthermore, the approximately $600,000 received by the county was a one-time payment unlikely to be repeated in future years.

So the county can look forward to a net reduction of $450,000 a year going forward thanks to our commitment to crypto, which will quickly translate into reduced employment and services.

Finally, crypto mining has added very few jobs. The Usk facility employs around a dozen personnel split between Allrise and Bitmain (although they sometimes add a number of poorly paid “as-needed” part-time employees to their publicly reported employee count.)

In hindsight, almost any other alternative use of the former PNC Mill would have created more economic potential for our county. 

Perhaps the financial challenges facing the Bitmain/Allrise's Bitcoin mine in Usk (POC Cryptonomics - PROTECT PEND OREILLE) and a potential plan to sell the facility seemly leaked by Crypto Commissioner John Gentle (Did County Commissioner John Gentle just leak Allrise/Bitmain’s plan to sell the former PNC mill? - PROTECT PEND OREILLE) will clear the obstacles to real economic growth that Bitcon has brought to our County. 

The Spokesman-Review published a deep-dive investigation into the factors behind the failure of HiTest Sands proposed Silicon Smelter project in Pend Oreille County. The article, titled "Silicon smelter once proposed for Newport being built in Tennessee" reports that the "local proposal hit permitting, zoning, pollution and oppositional roadblocks."

You can read the full article here: https://eedition.spokesman.com/infinity/article_popover_share.aspx?guid=de46e6db-21c1-4b0d-bcc9-3ee0dc505730

Our summary: 

The smelter project failed because of:
1) The County Community Development Office was unable to update their comprehensive plan and adjust zoning in a timely manner.
2) The power infrastructure in the County could not the support the 210 MW of power required without expensive and time-consuming new construction.
3) The rail transportation network could not support the smelter's requirements without expensive upgrades.

Former HiTest CEO Jason Tymko stated that opposition by environmental groups was not a significant factor in the cancellation of the project. "It (the environmental group opposition) was no hindrance."

Tymko said the $300,000 debt that our Economic Development Council owes the State Department of Commerce to repay an economic development grant for the smelter project "wasn't a liability of Sinova" [his current company."​

Yesterday the Spokesman-Review published an article calling into question Allrise Capital's /Merkle Standard's ability to restart the former PNC paper mill in Usk and the legitimacy of their request through the Pend Oreille County Economic Development Council for a $400,000 grant from the State Department of Commerce. According to the story:

"The company that runs a cryptocurrency operation in Usk is seeking a $400,000 grant from the state that it says will help to restart a shuttered papermill even though the site doesn't have access to the electrical power needed to operate the plant....

"The mill site, which is now home to a cryptocurrency mining operation called Merkle Standard, was told by the Bonneville Power Administration in 2022 that it could not operate both the data mining operation and the papermill without at least $40 million in infrastructure upgrades.

"Pend Oreille County Commissioner Robert Rosencrantz said he doesn't think its proper for Ponderay Industries, which owns the mill, to seek grant money if it knew it didn't have a source of power. 

"But nowhere in the request does it mention that Ponderay Industries never secured the power needed to restart the mill. 

"Asked if she believed she was obligated to accurately portray the reality to the state, Wyorbek said it was Ponderay Industries' job to provide that information.

Read the full story at: Critics question grant request to restart Usk papermill | The Spokesman-Review

NOTE: Ms. Wyorbek has recently drawn criticism by withholding that the Pend Oreille EDC owes the State Department of Commerce $300,000 from an earlier grant provided to the EDC for the stillborn HiTest Silicon Smelter. Ms. Wyorbek delayed notifying the County Commissioners (the county will be responsibility for the debt) for over four months while the continuation of her employment contract was being debated.  

​Public records obtained by ProtectPendOreille.org continue to reveal efforts by Allrise/Bitmain to mislead the public about their Bitcoin mining operations at the former PNC paper mill in Usk.
 
Last Spring, Allrise/Bitmain began publicly blaming our PUD and the Bonneville Power Administration for allegedly blocking a proposed restart of the paper mill. The PUD took the unusual step of publicly responding to Allrise/Bitmain’s false allegations. In a press release dated April 4, 2022, the PUD responded, “Contrary to recent public statements, BPA did not prohibit Allrise from restarting the paper mill.”
 
But new documents recently obtained through public records request reveal that only a few weeks after taking ownership of the mill in June 2021, Allrise specifically directed the BPA that they only wanted power for crypto mining.
 
One of the smoking-gun documents is a letter from Todd Behrend to the PUD General Manager Colin Willenbrock dated November 8, 2021. In the letter, Behrend complains that the BPA study requested by Allrise to evaluate the capabilities of the power infrastructure supporting the former mill site included power parameters that could have supported a paper mill. Allrise, however, had been telling the PUD for months that they only wanted the BPA to consider power parameters suitable for crypto mining.
 
Behrend wrote, “While the consultant report you referenced does mention a 0.9 power factor for crypto mining, you will also note that value is an assumed value. If the District had conferred with Ponderay before submitting the LLIP [BPA study request]… I would have gladly confirmed that the actual data center equipment Ponderay will be operating has a power factor between 0.98 and 0.99.” Note: the paper mill requires electricity with a lower power factor than crypto miners.
 
Allrise/Bitmain’s misinformation campaigns targeting our citizen-owned PUD are reprehensible.