The old Wonka Mini Storage next to an Idaho Power substation in Ontario is being converted into a bitcoin mine by an Idaho-based real estate development firm, the Pines Townhomes, LLC. (The Enterprise/Joe Siess)
ONTARIO – Coming at the tail end of a global rush on cheap electricity in the Pacific Northwest, a Fruitland real estate development firm is installing a bitcoin mining operation in an old storage facility north of Ontario.
Bitcoin, a type of cryptocurrency that exists digitally, requires substantial electrical power to mine. Successful mines could potentially generate millions of dollars in revenue.
The bitcoin mining process involves employing a fleet of high-powered computers to crunch a series of complicated math equations. The longer the computers work on the high-speed calculations, the greater the chance of extracting bitcoin.
Last year, and especially in 2017, there was a massive spike in the value of a single bitcoin from $1,000 to over $19,000, prompting a bitcoin boom in central Washington, an area rich in cheap hydroelectric power.
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In March 2018, Chelan instituted a moratorium on allowing more cryptomining operations to plug into the area’s energy grid, a move the Chelan County Public Utility District said it made after reviewing the impacts existing mines were having on utility operations.
The district said in a statement that the pause was intended to give the utility a chance to learn from the current situation and develop new service rates for future operations.
The moratorium was prompted by an influx of mining operations that essentially gobbled up too much electricity, causing substantial supply challenges for utility providers.
At one point, prospective miners from Asia were flying into the Wenatchee airport on private jets, seeking to buy up chunks of power for their operations.
Now, an Idaho developer is building a mine in Ontario that will then be leased to publicly traded companies for bitcoin mining.
The real estate developer, the Pines Townhomes LLC, bought the property, which used to be Wonka Mini Storage, adjacent to an Idaho Power substation nestled along North Oregon Street and the northbound Interstate 84 onramp, county records show.
Paul Knudson, the owner of the development firm building the mine, is also the CEO of XTRA Bitcoin Inc., a firm registered in Wyoming.
XTRA Bitcoin recently merged with Idaho-based Therapy Cells Inc., an early stage bioengineering company, documents filed with the Wyoming Secretary of State show.
On its Twitter account, XTRA Bitcoin said that it “has usage rights to 15MW” of electricity it said was worth an estimated $2.3 million.
“A view of what 15MW can bring revenue wise is $23.6m to $33.5m gross,” the company added.
Fifteen megawatts of electrical power is enough to power about 12,000 homes, Sven Berg, a communications specialist at Idaho Power said. Ontario has about 4,300 homes, according to the Census Bureau.
Currently, Chelan County PUD has 10 authorized cryptocurrency customers that combined use 7.5 megawatts of electricity, Kimberlee Craig, utility public information officer said in an email.
An invoice, also posted on Twitter by XTRA Bitcoin Inc., showed that the company has invested in $608,050 in equipment for the mine. Knudson, who has been working in the bitcoin mining industry for two years, stressed that he is speaking for his real estate development firm, and not on behalf of the companies that he said would lease space for bitcoin mining.
“We are still working out some of the development issues, and we’re working real hard on the funding side of it,” Knudson said.
Knudson said that the mining operation will require new electrical infrastructure to generate enough power for the facility without effecting Ontario’s power grid.
Jordan Rodriguez, a corporate communications specialist at Idaho Power, confirmed that Idaho Power is working on “a potential large load project in that area.”
Rodriguez explained that when a customer with large power needs comes into the area, Idaho Power engages a team of energy advisors to determine whether energizing the customer will adversely affect other customers.
If more infrastructure is needed, as is the case with the XTRA Bitcoin mine, “we are going to work with the customer to provide that infrastructure,” Rodriguez said. Rodriguez added that the customer would be responsible for the cost.
“Once you build the thing and sit it there, it’s like leaving your computer there on your desk,” Knudson said of the mine. “It’s like leaving a ceiling fan on 24/7.”
Knudson said the original plan was to operate in Wenatchee, Wash. Wenatchee’s power grid, however, at the time had been overloaded with electricity usage from other cryptocurrency mining operations and couldn’t sustain more.
Knudson settled on eastern Oregon, which he said is “in the lower 20 percent” as far as electricity prices go.
“But on average Idaho and the Pacific Northwest are on the low end of power because of their hydro power,” Knudson added.
Berg said that Idaho Power, over the years, has had contact with organizations and people interested in setting up cryptocurrency mining operations, but that due to the unpredictable nature of the industry, it is hard to predict how many would actually take root in the area.
“We’ve concluded that we’ve got plenty of power to meet those needs until at least 2026,” Berg said. “That is seven years from now, and obviously things can change, and we’ll continually address those needs as they change.”
Knudson said that he hopes construction will begin in the next 60 days, and that he wants the mine to be finished by next year.
News tip? Contact reporter Joe Siess: [email protected] or 541-473-3377.
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