Miners shocked by electricity price surge in Washington State

Quick Take

  • Blocktree Props., LLC v. Pub. Utility Dist. №2 of Grant Cty. Wash.
  • Washington State municipal corporation created an “evolving industry” rate for miners’ electricity needs, but decided to alter it such that it would substantially increase miners’ costs
  • A group of tech companies focused on crypto mining asked a federal judge to enjoin the Public Utility District from implementing a new rate class
  • Court declined to grant the injunction because it found that the rate wasn’t discriminatory, arbitrary or made without due process, and it didn’t violate the miners’ constitutional rights

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP".

[related id=1]Blocktree Props., LLC v. Pub. Utility Dist. №2 of Grant Cty. Wash., 2019 U.S. Dist. LEXIS 54423 (E.D. Wash. 2019) [SDP]

Cryptocurrency litigation really runs the gamut. This particular opinion takes us deep into the really exciting world of electricity rate setting. OK, maybe electricity rates aren’t that exciting … unless you are cryptocurrency miner, like the plaintiffs are in this case, and that case rates are the difference between big bucks and big losses.

The Plaintiffs here are a group of tech firms mostly focused on crypto mining. They asked a federal judge in Washington State to enjoin the Grant County Public Utility District (“PUD”) from implementing a new rate class which would substantially increase electricity rates charged to “evolving industries,” which would include crypto miners. The Court declined to grant the injunction because it found that the rate wasn’t discriminatory, arbitrary, or made without due process, and it didn't violate the miners’ constitutional rights.

The Court begins its analysis by explaining blockchain tech and mining in general. It points out that one of a miner’s biggest expenses (the biggest?) is electricity, so miners locate themselves places with cheap electricity, like Washington State, apparently, with its cheap hydroelectric power.

This particular PUD is a Washington State municipal corporation and claims to have the cheapest electricity in the country. It sets rates based on operations and power consumption, and different industries are grouped together. To deal with the significant interest from mining industry, it created an “evolving industry” rate class for miners.