Chelan PUD Going After Unauthorized Cryptocurrency Operations

Chelan PUD commissioners Monday directed staff to take all necessary steps to enforce the moratorium on unauthorized cryptocurrency operations including imposing available fees and penalties and considering new ones, disconnecting service and reporting unauthorized loads to law enforcement as power theft and to fire officials to protect public safety.

“Not only are we concerned, we’re incensed that individuals are putting people at risk,” said Commissioner Steve McKenna. “We’re not going to tolerate it. This is a strong message, and I want to make that very clear.”

His comments came after hearing of unauthorized cryptocurrency mining discovered last week in a Wenatchee apartment, a Malaga home and Chelan mini-storage units. Each operation was using enough power to create fire risks for neighbors and damage grid equipment not sized for the load. PUD crews disconnected power for the unauthorized services.

Board President Dennis Bolz said these actions will not be tolerated. “This has to end,” Bolz said.

Commissioner Garry Arseneault said heightened enforcement is aimed at, “scoundrels,” who are deliberating thwarting PUD regulations. “I want to take one step back and say that users of power that have legitimate requests, and have been properly sized for the use of that power, that’s not the kind of entity we’re discussing today.

“What we’re discussing is a person who is purposely trying to slip around the end and use power in a way that a facility was not designed for and doing so in a manner where there’s been no request for service to meet that kind of demand.” He added, “I see yet, once again, a reason to support the installation of automated meters to be able to confront these scoundrels before they do burn an apartment building down and perhaps kill a family or children in the process.”

PUD commissioners underscored their concern about safety risks from rogue operations in ratifying the March 19 moratorium. Commissioners will review the moratorium and take comment at a public hearing at 1 p.m. on Monday, May 14.

John Stoll, Customer Utilities managing director, said those examples show the need for additional fees to cover the District’s costs to investigate and monitor rogue cryptocurrency operations and to recover the cost of damage to grid equipment not designed for high density loads (HDL).

Stoll said staff reviewing meter readings saw power use at the Wenatchee apartment jump 20-fold in a month. Use went from a typical 500 kilowatt hours (kwH) to 11,000-plus kwH, far above what residential wiring is designed to carry. When PUD staff checked the location, they could see open windows and a balcony door open to the chilly spring air likely keeping the cryptocurrency mining equipment cool. Investigation showed no one living in the apartment.

In Malaga, PUD staff notified the homeowner his mining operation was unauthorized. He talked with staff about options for legal service, but continued to mine without following through until crews disconnected service. In Chelan, an approved operator went beyond the allowed power amount without notifying the PUD as required.

Lindsey Mohns, Customer Utilities business manager, and Catherine Melton, business analyst, reviewed proposed additional fees for investigation and enforcement of the HDL rate for unauthorized operations and for the loss of useful life for overtaxed equipment. The fees could total about $5,000 for unauthorized operations in residential areas and $7,000 to $10,000 in commercial space. Staff will ask for action on the new fees at the April 16 board meeting.

Commissioners also heard from Nick Martini of Half Moon Bay, Calif., a potential cryptocurrency operator, who asked board members to consider flexibility in allowing some applications to move forward when operators seek to meet all requirements and work with the PUD in developing the industry.