Kentucky Utilities (KU) has signed a contract with Bitiki to establish a cryptocurrency mining facility in Union County. The contract, which is pending approval from the Kentucky Public Service Commission, requires Bitiki to invest approximately $25 million in facilities on a former mine site in Waverly, Kentucky. As part of the deal, Bitiki is expected to create five jobs and have access to up to 13 megawatts of electricity, enough to power tens of thousands of homes.
The agreement offers Bitiki discounts for the first five years of the contract, with estimated revenues for KU reaching nearly $10 million over the contract’s lifetime. This revenue will help cover the fixed costs that all utility ratepayers incur. The Kentucky Public Service Commission’s approval of the contract has been welcomed by LGE/KU spokesperson Natasha Collins, who stated that it aligns with their goal of attracting businesses to Kentucky.
However, opponents of the deal argue that cryptocurrency miners consume large amounts of electricity without providing significant economic benefits to local communities. Some believe that Bitiki does not require the discounts since its operation is already functioning in Union County. Cryptomining is an energy-intensive process that uses computers to perform complex calculations in exchange for digital currency.
The former coal mines in Kentucky provide ideal locations for these facilities, offering second lives for the land and access to necessary transmission lines. The state has also implemented tax incentives, such as sales and use tax exemptions, to attract cryptomining investments.
While utilities are willing to extend discounts to cover their fixed costs, critics contend that the transient nature of cryptomining facilities makes them less reliable for long-term benefits. These facilities can easily relocate to states with lower electricity prices or cease operations altogether due to volatility in cryptocurrency markets. To protect against potential default, Kentucky Utilities included a $1.275 million surety bond in the Bitiki contract.
This contract with Bitiki is the first of three similar energy contracts currently under review by state utility regulators. The Kentucky Public Service Commission will decide on contracts for two other crypto companies in the coming months as they look to expand into Kentucky Power territory in the eastern part of the state.