Kentucky to review contracts offering cheaper electricity to miners

The Kentucky Public Service Commission (PSC) has reportedly opened a formal investigation into two proposed contracts that would offer discounted electricity prices to new crypto mining operations.

According to a Dec. 5 statement from environmental law group Earthjustice, the government department is reportedly investigating whether subsidizing crypto-mining operations will increase electricity costs for Kentucky residents.

The two mining contracts under investigation include one between Kentucky Power and Ebon International LLC, which operates a 250-megawatt mining facility in Louisa, and mining company Bitki-KY, which operates a 13-megawatt facility in Waverly, Kentucky.

The contract proposes to provide reduced electricity rates at the Ebon facility, while the Bitki-KY has already received a $250,000 tax credit from the State of Kentucky after the adoption of a Kentucky tax relief bill for local crypto miners.

Earthjustice argued in its statement that cryptocurrency mining is “extremely and exponentially energy-intensive by design” and that reduced rates for facilities “could lead to higher electric bills for everyday Kentuckians. “.

A senior attorney for the environmental group, Thomas Cmar, said he “looks forward to the upcoming hearings and the discovery process so that Kentuckians can know exactly what they will be paying for by subsidizing these facilities,” adding:

“I hope the Commission will see the hollow promises of these cryptocurrency mining companies that they will benefit local communities. […] and pay more attention to contracts like these in the future.

“Cryptocurrency mining is a largely unregulated, energy-intensive industry that could cost everyday Kentuckians dearly,” he added.

The group also claimed that crypto mining companies rarely create employment opportunities due to the highly automated nature of mining operations.

Lane Boldman, executive director of the Kentucky Conservation Committee environmental advocacy group, added that the cost burden associated with building new crypto mining facilities “often lands on ordinary people” because ‘electricity from everyone else increase to cover costs’.

Related: Eager to work: Bitcoin’s switch to proof-of-stake remains unlikely

Kentucky has emerged as a hotspot for crypto mining companies, which are now reportedly contributing 20% ​​of the country’s computing power for proof-of-work mining, which ranks second among all US states after New York. according to an Oct. 9 CNBC. report.

But while many environmental groups want Bitcoin (BTC) and other proof-of-work blockchains to switch to proof-of-stake due to energy issues, the Bitcoin Mining Council recently released a report suggesting that Bitcoin could soon become “zero emissions”. network” by “burning stranded methane gas to extract BTC that would otherwise have been emitted into the atmosphere.”

Cointelegraph contacted the PSC for confirmation and details of the investigation, but did not receive an immediate response.

Earthjustice noted that it worked with the Kentucky Resource Council to file comments on behalf of a broad coalition of Kentucky-based environmental groups and asked the PSC to consider the matter.