Wyoming’s Black Hills Energy Inks first deal under new blockchain tariff

To lure Bitcoin miners to the region, Black Hills Energy today announced that it has completed its first agreement to supply power to a crypto-mining facility under the Wyoming Blockchain Interruptible Service Tariff.

The company says that the unidentified plant will be one of the largest bitcoin mining operations in the region, and is expected to be operational and buy energy by the end of the year.

“We are excited to serve this new type of customer and explore the benefits we can provide to other long-term flexible cargo customers,” said Black Hills Corp. Chief Linn Evans in a statement.

The company says attracting high-energy blockchain companies will provide Wyomingites with several economic benefits, including property and sales taxes, and long-term employment.

Black Hills Energy is a subsidiary of Cheyenne Light, Fuel, and Power Company, which in turn is part of Rapid City, South Dakota-based Black Hills Corporation. The company serves 1.2 million customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming.

The energy provider first proposed the Blockchain Interruptible Service Tariff in October 2018 to the Wyoming Public Service Commission, saying that the state “existing tariffs are insufficient to attract blockchain business while continuing to provide safe, reliable and affordable service to existing retail customers.”

The tariff was approved in June 2019 to attract new industries that have high energy needs over a limited duration, more specifically blockchain companies.

“By offering a blockchain-interruptible service option, we are able to meet the high energy requirements of the blockchain industry without adding costs to our existing retail customers,” said company vice president Shirley Welte at the time.

Under the agreement, Black Hills Energy will provide up to 45 megawatts of electrical service with the option to extend the service up to 75 megawatts to the new customer in Cheyenne, Wyoming, for five years.

Bitcoin mining has been a hotly debated topic in recent years due to the amount of electricity needed to support the network. High energy consumption limits the profitability of mining and has a negative impact on the environment. If the Bitcoin network were a nation, it would rank as 34th in the world in annual power consumption, according to the Cambridge Bitcoin Electricity Consumption Index.

Environmental concerns about Bitcoin mining have led states such as New York to consider banning the practice. Organizations including the Wikimedia Foundation and Mozilla stopped accepting Bitcoin donations this year, citing the environmental impact.

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