Crypto mining is not a low cost endeavor. A major capital investment in computers is “Step One”, but then the power necessary to complete the task is exorbitant by today’s standards. Utility commissions across the globe are presently wrestling with this issue, until a more efficient mining process is developed. In the meantime, news headlines are beginning to appear related to litigation in this space. One example is a recent court filing in the Grant County public utility district (PUD) in Washington State, U.S.A.
In this case, the PUD commissioners did what they had to do to preserve fairness within its 50,000-plus customer base. As details come to light, this one small county PUD had received requests in 2017 for over 2,000 megawatts of power. Three quarter’s of this request came from cryptocurrency mining operaters. To put this figure into perspective, the PUD noted that this amount of power could provide “more than three times the electricity needed to power all Grant County homes, farms, businesses and industry.”
After some study and deliberation, the commissioners on the public utility approved last August the formation of a new special class of user: a “new Rate 17 for evolving industries.” The commission further disclosed that, “All Grant PUD customers in the evolving-industry profile are miners of cryptocurrency, including bitcoin. Rate 17 customers will receive a 15-percent increase next year, a 35-percent increase in 2020 and a 50-percent increase in 2021, when the new rate will be fully in effect.”
Nine crypto mining firms, the ones impacted by the new rule, have subsequently responded by filing a lawsuit, claiming that the commissioners “acted inappropriately in creating and approving a new rate that raises electricity costs”, unfortunately for crypto mining firms and other new ‘evolving industry’ customers. The lawsuit includes the PUD and the names of five individual commissioners in its filing. The issue became public when the commission published the minutes of a January meeting, where it had agreed to cover the legal expenses of its commissioners in regards to this lawsuit.
Regulators and government officials the world over have expressed concerns about the excessive use of electricity necessary to power crypto mining networks. One report summarized the present debate:
During Bitcoin’s explosive growth in 2017, mainstream media outlets published a raft of alarmist articles comparing Bitcoin’s energy consumption to countries including Ireland and Nigeria. With a majority of the world’s governments committed to combating climate change, the energy-intensive mining process is a huge black mark against cryptocurrency’s long-term viability.
Understanding the importance of mining in the crypto ecosphere can be a daunting task. In the most basic of explanations, miners are the “auditors” of the entire blockchain:
Mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new coins are released. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle.
If you were acquainted with cryptographic techniques, 64-digit-hexadecimals, and complicated hash-tag totals, then you would realize that a great deal of computing power is required to receive rewards in the crypto system.
Unfortunately, current mining power consumption is beyond acceptable limits and will necessitate responses not unlike the one from the Grant County PUD. What is the answer? Will technology save the day? Crypto insiders are hopeful that alternatives to the existing process, which are currently being tested, will demonstrably curtail the power necessary to reconcile decentralized blockchain transactions. The future of cryptocurrencies depends upon it.