Washington Cryptocurrency Mining Moratorium Leads to Reports of "Belligerence" and Absurd Security Overreactions

Crypto Power Applicants Shunned -- Again

The Chelan County PUD (Public Utility District) -- which provides power to over 43,000 customers in Chelan County, in north-central Washington, USA, and owns/operates the nation's second largest nonfederal, publicly-owned hydroelectric generating system -- decided to stop accepting and/or processing applications for electric service for cryptocurrency mining, effective immediately, on Monday, March 19, 2018. This isn't the first time Chelan County PUD has made such a move, either: from December 2014 until January 3, 2017, Chelan County PUD had placed a hold on processing applications for "bitcoin mining and similar operations."

They plan to hold a public hearing at 1:00pm PDT on Monday, May 14, at which time "Commissioners will review the moratorium and take comment." It's not clear to me whether applications will be accepted and/or processed after that time, as the original announcement regarding the application moratorium states that at the May 14 hearing, "[a]pproved applications with fees and charges paid will go forward." In a later article published regarding the moratorium, however, there is no mention of any guaranteed changes coming May 14 -- only a "review."

"Bitcoin Belligerence"

Due to Chelan County PUD's inability to keep up with the insatiable power demands of cryptocurrency enthusiasts looking to mine their coin of choice, many miners have taken extreme action against the Chelan County PUD by ... oh, wait, no they haven't. According to an article published by Government Technology:

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.

Wait... "None of the incidents have escalated to the point of calling law enforcement?" Isn't that pretty much the first thing any commercial entity does when it feels threatened by the public (unless they have their own, private security -- then they call the police)? If nothing has actually happened to prompt anyone from Chelan County PUD to have to call the police, then I suppose it's reasonable for them to take some proactive action to make sure no such situation ever does occur. Fortunately, Chelan County PUD has the proactive plans covered:

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.

Christ, you'd think these people are running a pot shop or something. Seriously, as a medical marijuana patient, I see far less security than what's described above at one of Seattle's largest I-502 (legal, recreational/medical marijuana) shops, which, in February, 2018 (according to 502 Data), raked in just over $22,610/day -- and they're actually the third largest shop in the city (by sales volume); the number one-ranked shop pulled in just under $33,350/day over the same period. And because of the federal laws prohibiting banks from dealing with marijuana-related businesses, all of that revenue is in cash. While I have no doubt they take plenty of precautions, the stoned dude checking my ID on the way in and the 3-6 "budtenders" all busy waiting on customers -- not to mention the lack of ballistic panels anywhere -- leads me to conclude that Chelan County PUD is overreacting a bit. ($20,000 to construct a "small, secure lobby?" I'm sure their customers will be very happy to know that the company is investing wisely.)

Miners Gonna Mine

Even Bitcoin.com picked up the story. In their article, they point out:

Chelan County PUD has indicated that when the moratorium was called, it 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 taking action, the PUD’s staff has reportedly identified “three more unauthorized operations each week.” The company has expressed concerns about “unauthorized bitcoin operators overloading the system, creating fire hazards and damaging power grid infrastructure.”

The obvious question, to me, seems to be: if Chelan County PUD is unable to keep up with the power demands of its customers/potential customers to the point that they feel the need to spend $20,000 on a secure lobby-closet -- not to mention the rest of their laundry list of security overreactions that don't have a price tag attached -- wouldn't they be better suited, in the long-run, investing that money in their, you know, energy infrastructure? They are, after all, an energy company, whose business is to generate, buy, and sell electric power. They're not a bank or a jewelry store or (I'll mention them again) a pot shop. They don't sell liquor, overpriced snacks, or lottery tickets. I doubt they even have an ATM on-site.

Any of the types of businesses I mentioned may have similarly secure facilities (in the cases of most banks or jewelry stores) or (apparently) significantly less secure facilities (in the cases of most pot shops or convenience stores) -- however, in every one of those businesses, a would-be thief has incentive to rob the place (banks have vaults full of cash, jewelry stores have ... jewelry, pot shops have loads and loads of green - both in flower and paper form, and convenience stores are generally considered "easy targets" that potentially have thousands of dollars in the register alone). At the Chelan County PUD office, what is a disgruntled cryptocurrency miner going to do, worse case? Take someone hostage and demand they process his (or her) application for increased power, then make sure they actually follow-up on that application and set everything up properly? That doesn't seem likely, and it's for more reasons than "anyone that isn't otherwise completely deranged would know this is never going to work." If miners have put up with the moratorium for this long, why are they suddenly going to become violent?

More importantly: if the money being spent on keeping Chelan County PUD safe from "belligerent" cryptocurrency miners was actually spent on improving and adding capacity to their infrastructure, they wouldn't have to worry about dealing with disgruntled customers/potential customers in the first place. It's an obvious chicken-and-egg situation, but considering that, by Chelan County PUD's own admission, "underground" miners are likely to continue popping up, why continue to play whack-a-mole to secure yourself from your own potential customers when you could grow your business and sell them the thing they want, instead? Furthermore, by focusing on improving energy infrastructure and allowing miners to properly file applications and acquire the necessary power for their mining needs via the proper channels, there is less danger to the public -- no more "three ... unauthorized operations" popping up "each week," as Chelan County PUD's staff has reportedly observed.

Nerds Are Scary?

While I have no doubt there are some cryptocurrency mining enthusiasts who may become a tad "overzealous" in their efforts to secure power for their mining operation, I don't think it will ever match the allure of going into a building and walking out with literally more cash than you can possibly carry. Especially considering that you can't just take their "bags of power" and go run your datacenter -- these things require ongoing operations. So, the odds of someone resorting to violence for the sake of processing (and, erm, approving) their application to request power for a mining operation seem, in my opinion, highly unlikely.

This is just another example of "mainstream" public opinion being something along the lines of, "crypto = bad/scary." We have to continue to fight that perception by ... being peaceful and not fighting with power companies or starting storage facilities on fire.

tldr; If you want to mine crypto, stay out of Chelan County, WA. If you're going to mine crypto, regardless of where you do it, make sure your equipment is properly powered.
Keep calm, HODL, and spread the good word.