The Treasure State has a rich history of extracting traditional resources such as gold, silver, copper, zinc, and coal. As these industries decline, however, Montana may be uniquely situated on the frontier of a lucrative new form of mining: Bitcoin.
Over the past several years, Northwest U.S. regional electric utilities have been inundated with requests for service from power-hungry cryptocurrency processing loads. The requests for service started in the Mid-Columbia Basin of central Washington — particularly in Chelan and Walla Walla counties — and have since spread throughout the Pacific Northwest, recently extending into this far-flung corner of Montana, where a virtual gold rush is underway.
Electric utilities in the Northwest boast some of the cheapest electricity rates in the nation, due in large part to the low cost of hydropower and its dense network of dams, making the region an attractive location for Bitcoin-mining facilities. The sites use computer processors to solve complex math equations and track digital currency exchanges, uploading them to a digital ledger that validates the transactions.
The miners who solve the equation first earn a reward in Bitcoin, or any of the other types of digital assets their ultra-fast computers are designed to process.
It’s presented a significant challenge for local utilities unprepared for the inrush of high-ticket customers looking to draw substantial amounts of energy out of the grid as they run vast computer networks 24 hours a day, 365 days a year, using extensive ventilation systems to cool the machines.
Citing the influx of power demands, the Flathead Electric Cooperative’s Board of Trustees on Feb. 21 imposed a six-month moratorium on cryptocurrency mining, with the option of extending the moratorium an additional six months if necessary.
“Electric utilities outside of Washington are now seeing an increase in the number of service requests from cryptocurrency processing loads,” FEC General Manager Mark Johnson said. “Flathead Electric is no exception.”
“With the sudden interest in locating in Flathead Electric’s service territory, the Cooperative has not had time to fully understand the impact to its electric distribution system from these types of loads,” he continued.
The requests for service have ranged in load size, from less than a megawatt to up to 30 — enough to power tens of thousands of homes.
During the moratorium, FEC staff will evaluate the best way to handle the loads to mitigate the impacts to other members and rethink its rate structures.
Still, some cryptocurrency processing load requests were in progress prior to the moratorium and, while the requests caught the utility off guard, they are “grandfathered in,” Johnson said, meaning they are not subject to the moratorium and the miners worked in concert with FEC to accommodate their requests for power.
While some of the interest has come from as far away as China and other out-of-state companies looking to quickly capitalize on the hype driving the Bitcoin boom, it has also included local tech entrepreneurs who have been tracking the industry for years, prior to its explosion onto the mainstream market.
Cryptocurrency cottage industries have been springing up in the region for years, with miners running specialized servers out of their homes or garages — shoe-box size computers arranged in high-density pods, designed to run 24 hours a day to mine the digital currency.
Through his new business, CMH, LLC, Russell and his partners have invested heavily in the construction of a new building to accommodate cryptocurrency miners in the Flathead Valley, leasing space, infrastructure and power to accommodate their needs.
In the first phase of development, slated for primetime in June, the miners will set up shop in 3,200 square feet of space, with CMH providing mechanical ventilation to “move a goodly amount of cool, Montana air through the building” in peak summer months.
The general-purpose facility is capable of housing more than 2,000 servers that can process different types of cryptocurrency depending on the customer’s desire, and Russell said he already has lease commitments for the entire space.
“I felt as though locally we are ideally suited because of access to clean, relatively inexpensive power while benefiting from a relatively cool climate,” he said, noting that cooling ventilation systems will only be necessary during peak summer months.
He understands FEC’s concerns about offering large loads to customers demanding high volumes of…