Kentucky Utilities (KU) has finalized a contract with Bitiki to construct and operate a cryptocurrency mining facility in Union County. The agreement is subject to approval by the Kentucky Public Service Commission. Bitiki plans to invest approximately $25 million in the facility, located on a former mine site in Waverly, Kentucky. The project is expected to create five jobs.
If approved, Bitiki will have access to up to 13 megawatts of electricity, enough to power thousands of homes. The contract, which was approved by the Public Service Commission, provides Bitiki with discounts for the first five years. Despite the discount, KU estimates that it will generate nearly $10 million in revenue over the life of the contract, helping to cover fixed costs for all ratepayers.
Proponents of the contract argue that it will attract businesses and promote economic development in Kentucky. However, opponents claim that cryptocurrency mining consumes excessive amounts of electricity while offering little local economic benefit. They argue that the discounts provided to cryptominers are unnecessary if the operation is already operational.
Cryptomining requires substantial electricity to power computers that perform calculations for mining digital currency. Situating these facilities on former coal mines gives the land a second purpose and provides access to necessary transmission lines. Kentucky has become an attractive location for cryptomining due to its cheap power, available land, and tax incentives.
While utilities are generally willing to extend discounts to large electricity consumers, critics suggest that cryptomining facilities are transient. They can easily move to other locations with lower electricity prices, making it uncertain if they will remain in Kentucky once the discounts expire. Additionally, the volatility of cryptocurrency markets poses a risk of bankruptcy for these companies. To mitigate this risk, Kentucky Utilities included a $1.275 million surety bond in the Bitiki contract as a security against potential defaults.
Bitiki’s contract is the first of three large energy contracts being reviewed by state utility regulators. Two other crypto companies are also seeking similar contracts to expand into Kentucky Power territory in the eastern part of the state. The Kentucky Public Service Commission will make decisions on these contracts in the coming months.
