In Eastern Washington, denied bitcoin miners turn belligerent

Chelan PUD has installed bulletproof panels in response to angry, disconnected miners.

By Nevonne McDaniels / The Wenatchee World

WENATCHEE — Bitcoin belligerence is on the rise, according to Chelan County PUD staff reports, prompting a boost in employee safety and security measures that include bulletproof panels and security cameras at PUD headquarters.

The reported bad behavior stems from two cryptocurrency-related groups — unauthorized miners whose power has been disconnected and high-density load service applicants denied because of the current moratorium.

“PUD employees in the field and those in the office who are handling issues related to high-density load service have encountered an increasing number of upset customers and potential customers,” said PUD spokeswoman Kimberlee Craig. “In some cases people can get agitated and argumentative. Our goal always is to provide excellent customer service, as well as to keep customers, the public and employees safe, especially when emotions may be running high.”

None of the incidents have escalated to the point of calling law enforcement, she said.

“The volume of requests and the sense of urgency by applicants has changed the dynamics of the interaction by staff with the cryptocurrency customers,” she said.

As a result, staff is taking some proactive steps, which PUD Security Director Rich Hyatt outlined for commissioners on Monday.

They include:

* Designing a small, secure lobby at the downtown service building where people go to request and discuss new services. Construction is set to start soon on the estimated $20,000 project, which will be paid out of the current facilities budget.

* Adding ballistic panels and more cameras to the headquarters lobby.

* Providing more training on when to call PUD security staff for help.

* Increasing visibility of uniformed security staff. Security staff are training to pay attention to negative body language to identify people who are agitated.

* Assessing security at the Leavenworth and Chelan offices to determine what else may be needed. A trip to those offices is planned next week.

* Creating the process for working with local law enforcement when power theft from unauthorized bitcoin operations is suspected.

The PUD already had security measures in place, including staff training and uniformed contract security staff. The new physical barriers are an added measure, Craig said.

The increase in tension follows steps taken to put the brakes on blockchain operations that use specialized computer equipment and require a large amount of electricity, running continuously, which can put a strain on the system.

The PUD commissioners in March declared an emergency moratorium on new high-density load hookups to give staff time to develop a plan for dealing with the demand for electricity from digital currency miners. The demand spiked when Bitcoin values topped $19,000 last fall. It’s now down to about $7,000, but still up from $500 in 2013.

Staff also reported concerns about unauthorized bitcoin operators overloading the system, creating fire hazards and damaging power grid infrastructure. In April, commissioners provided staff with tools to help enforce the moratorium, including the ability to immediately disconnect power, charge the violators fees — up to $6,150 for in-home cryptocurrency operations and $11,400 for those in commercial or light industrial space — and, eventually, prosecute for power theft. The details on how that will work is still being developed, Hyatt said.

The commissioners agreed to an amnesty period for unauthorized Bitcoin miners not yet identified by the PUD about high-density load use. To qualify for the amnesty, they must shut down immediately and notify the PUD.

The amnesty period continues until May 14 when commissioners will hear public comment on whether to continue the emergency moratorium.

At the time the moratorium was called, Chelan County PUD had 22 approved high-density load customers using a total of about 13.5 megawatts; 19 pending applications for 16.3 megawatts; and had identified 28 unauthorized operations, with a watchlist of 12 and growing. Of the 28, 19 were shut down. Since then, staff reported finding about three more unauthorized operations each week.

The Douglas County PUD is also a popular location for the digital currency miners, but a payment structure adopted in 2014 prevented some of the problems facing the neighbors across the Columbia River.

Douglas County PUD requires a month’s deposit for cryptocurrency miners and an increase in rates for higher-energy consumption. It also requires a contract for customers who use more than 1.5 megawatts. It currently has eight commission-approved contracts for loads over 1.5 megawatts, amounting to a total of about 15 megawatts.

Meaghan Vibbert, Douglas County PUD’s public information officer, said the PUD is still accepting applications for crytpocurrency connections, but the system currently has no excess capacity.

Grant County PUD is seeing a demand that has prompted a proposed rate change.

“Staff has proposed to commissioners a new ‘Evolving Industry’ rate class for higher-risk businesses,” said Grant PUD spokeswoman Christine Pratt. Commissioners are expected to vote on the proposal Tuesday.

Safety concerns and overloading the system are not a concern at this point.

“Mining is likely happening, but as long as it poses no threat to Grant PUD infrastructure or customer safety, we don’t get involved,” Pratt said. “We have not shut off anyone’s power because of unsafe cryptomining.”

To date, 10 commercial cryptocurrency mining operations are active in Grant County, with an average load of 16.4 megawatts, as of February.

Since summer 2017, Grant PUD has received 125 new service requests that total more than 2,000 megawatts of electricity, about four times the power needed for all homes, businesses, government institutions and industry in the county. About 75 percent of these requests are from cryptocurrency firms.

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