Government Look Out:
The government of Kentucky is looking into whether the plan to offer cheaper electricity to crypto miners will make electricity more expensive for people who live in Kentucky.
The Kentucky Public Service Commission (PSC) is reportedly looking into two proposed contracts to give new crypto-mining operations lower electricity prices.
Earthjustice, an environmental law group, said in a statement on December 5 that the government would try to find out if subsidising crypto-mining operations will make electricity more expensive for people in Kentucky.
One of the contracts is between Kentucky Power and Ebon International LLC, which runs a 250-megawatt mining facility in Louisa. The other contract is between Kentucky Power and Bitki-KY, which runs a 13-megawatt mining facility in Waverly, Kentucky.
The contract says that the Ebon Facility will get cheaper electricity rates. At the same time, the Bitki-KY has already received a $250,000 tax credit from Kentucky after a bill that gives tax breaks to crypto miners in the state passed.
In its statement, Earthjustice said that crypto mining is “extremely and exponentially energy-intensive by design” and that the discounted rates for the facilities “could lead to higher electric bills for everyday Kentuckians.”
Thomas Cmar, a senior attorney for the environmental group, said they were “looking forward to the upcoming hearings and discovery process” so that Kentuckians could find out precisely what they would be paying for if they subsidised these facilities. He also said:
“I hope the Commission will see that these cryptocurrency mining companies are lying when they say they will help the local community […] and look at contracts like these with more scrutiny in the future.”
“Cryptocurrency mining is a mostly unregulated industry that uses a lot of energy and could cost Kentuckians a lot of money,” he said.
The group also said that the high level of automation in mining operations means that crypto-mining companies rarely create jobs.
Impact on regular people:
Lane Boldman, the head of the environmental group Kentucky Conservation Committee, said that the costs of building new crypto mining facilities “often fall on regular people” because “everyone else’s electric bills go up to cover the costs.”
According to a CNBC report from October 9, crypto mining companies are flocking to Kentucky, which now uses 20% of the country’s computer power for proof-of-work mining. This makes Kentucky the second most popular U.S. state for crypto mining after New York.
But many environmental groups want Bitcoin (BTC) and other proof-of-work blockchains to switch to proof-of-stake because it uses less energy. However, the Bitcoin Mining Council recently published a report that suggests Bitcoin could soon become a “zero-emission network” by “combusting stranded methane gas to mining BTC that would have been released into the atmosphere.”
Earthjustice said that it and the Kentucky Resources Council worked together to file comments on behalf of a large group of environmental groups in Kentucky and asked the PSC to look into the matter.