One penny. Or, if you prefer, 0.000001 Bitcoin.
That tiny amount is the reason a cryptocurrency “mining” craze that upended small communities in Washington state has passed over Oregon.
Oregon’s electric rates are cheap by national standards but not compared to Washington’s best prices, which are typically lower by 1 cent per kilowatt hour. That doesn’t sound like a lot of money but it is in the world of Bitcoin, a digital currency generated by power-hungry computers.
A boom in Bitcoin prices last year sent opportunists rushing into central Washington, capitalizing on the region’s rock-bottom power prices to produce the novel electronic currency that has become a cult-like rage in the past five years. The small-time entrepreneurs hooked up computers in sheds, shacks, vacant apartments and pretty much anywhere else they could find an electrical outlet.
The result was power surges, wrecked electrical gear, localized energy shortages and at least one small fire. The influx sent regulators scrambling, with one small Washington public utility district slapping a moratorium on new mining hookups earlier this year. That sent cryptocurrency miners scurrying and looking everywhere for new options.
Everywhere, it seems, but just across the Columbia River in Oregon. To Bitcoin miners, a 1-cent hike in power prices represents a 40 percent increase in the cost of their key raw material.
“Oregon, it’s not the next most competitive place. There are all kinds of other options,” said Ted Valkov, who runs one of just a handful of sizable Oregon Bitcoin mining operations from his home in The Dalles.
While Oregon has dodged the mining craze so far, small utilities are keeping a close eye on Bitcoin prices, watching customers’ power meters and preparing for the possibility of an influx if Bitcoin prices surge again.
Power is everything for Bitcoin miners, who generate monthly power bills in the tens of hundreds of thousands of dollars. They typically employ only a handful of workers and care little about things like tax incentives or transportation routes that are vital to other industries.
And with Bitcoin prices down sharply, the mad rush for power has waned.
“The pace of build has slowed down to a large extent,” Valkov said. “There’s a little bit more thought and economic analysis.”
Bitcoin is the most prominent of a number of cryptocurrencies that exist only electronically. Cryptographic tools authenticate and record each digital transaction, and Bitcoin is essentially an electronic record in a giant online ledger known as the blockchain.
Bitcoin owners store their stash in online wallets and spend their coins electronically, bartering for goods with other enthusiasts or buying directly from retailers who accept the electronic currency.
Crypto miners earn additional coins with computers that perform mathematical tasks underlying the transactions, and those tasks are what require so much power.
That is why Bitcoin miners put their computers in low-cost places, from China to Wenatchee. Bitmain, a major Chinese miner, appears to be contemplating a massive mining installation on up to 40 acres in Walla Walla.
Enthusiasts hail cryptocurrencies as decentralized alternatives to the dollar and other government-issued currencies. They tout them as a secure, anonymous technology that eliminates transactional barriers and costs.
Bitcoin trading is anonymous, so skeptics worry criminals will exploit it to deal in narcotics, human trafficking and child pornography. And they question the currencies’ underlying value, which depends entirely on adherents accepting that the digital coins are precious.
Once a fringe technology, cryptocurrency has begun intriguing mainstream financial institutions and has gained an avid following among technologists and libertarians. The price of Bitcoin has soared, from under $100 per unit five years ago to nearly $20,000 last fall amid brief, manic speculation.
That steep rise sparked a frenzy of Bitcoin mining around the world. Chelan County, in central Washington, was very nearly overwhelmed. The local public utility district received 200 megawatts in service requests between November and January – equivalent to the district’s entire power load.
“We were not structured to be able to deal with that,” Steve Wright, general manager of the Chelan County Public Utility District, told an online conference last month.
Power in central Washington costs as little as 2.7 cents per kilowatt hour, 20 percent of the national average. Chelan is in an especially good spot, owning three hydroelectric dams with the capacity to produce enough power annually for a city of 900,000.
Prospective miners came to the county of 76,000 residents from around the world in hopes of sucking up some of that power. Wright said some of them stepped right off a plane, bought a passel of computers and showed up in town asking for power.
Sometimes they wouldn’t even ask. Prospective miners rewired residential homes, industrial…