China-Based Cryptocurrency Firm Establishes Foothold In Central Washington

Dignitaries cut the ribbon at the grand opening of Bitmain's new East Wenatchee bitcoin mine -- in other words, a data center that earns cryptocurrency. CREDIT: TOM BANSE
Dignitaries cut the ribbon at the grand opening of Bitmain's new East Wenatchee bitcoin mine -- in other words, a data center that earns cryptocurrency. CREDIT: TOM BANSE/N3


One of the biggest players in the global cryptocurrency space has established a foothold in the Pacific Northwest. China-based Bitmain Technologies held a ribbon cutting for a $20 million data center near the Wenatchee airport on Friday. A celebratory mood ran through the grand opening despite headwinds besetting the virtual currency sector.

The six buildings in the new Bitmain complex are packed with thousands of specialized computers that earn virtual currency by maintaining bitcoin’s electronic ledger of transactions. Bitmain’s Director of Operations for North America Jeff Stearns appeared unfazed by the plunge in bitcoin’s value, now down more than 70 percent from last December’s high.

“We’re really focused on the long term,” said Stearns. “I would say in this bear market situation, and I would call it that at this point in time, that really represents opportunity for a company such as ourselves.”

Stearns worked around the rising number of utilities and nearby cities that have placed moratoriums on new hook-ups for energy-intensive — some even say wasteful – cryptocurrency operations. Bitmain found a welcoming home in Douglas County, Washington, where more data centers are under construction to take advantage of low-cost hydropower and a relatively mild climate to keep racks of computers cooled.

Port of Douglas County executive director Lisa Parks called the Bitmain data center “a huge get” for the area.

“Anytime there is a new industry, it is going to be something that makes people uncomfortable,” Parks said in an interview. “It is an industry that consumes a lot of power. From our perspective though, we were looking at it as a way in which we can complement and advance our other industries in our community.”

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Parks said her agency was keen for the Wenatchee Valley residents to develop expertise in the database technology underlying cryptocurrencies, which is called blockchain.

“If we’re uniquely situated to appeal to that industry, then that bodes well for us to be part of the foundation of the technology, and not just a consumer of it,” Parks said.

Washington State Department of Commerce business development manager Evan Wendlandt said it was “a big win” for the region to attract Bitmain, which he called an industry leader and “a very powerful company” that would diversify the tech footprint of Washington.

Salcido Enterprises CEO Malachi Salcido in one of his data centers, aka bitcoin mine. CREDIT: SALICIDO ENTERPRISES

Salcido Enterprises CEO Malachi Salcido in one of his data centers, aka bitcoin mine. CREDIT: SALICIDO ENTERPRISES

Attendees at the Bitcoin ribbon cutting could see three to five other data centers under construction in the immediate environs. Bitmain’s project is in the middle in terms of size at 12 megawatts of energy consumption. Wenatchee-based Salcido Enterprises hopes to bring a 20 megawatt cryptocurrency mine on line next year, which would consume roughly the same amount of energy as 9,000 average local homes, or more than enough to power all the households in the city of East Wenatchee.

Data centers serving the cloud computing sector are also rising near apple orchards to serve Yahoo! Japan and Sabey Corporation clients such as T-Mobile, Costco and VMWare.

The welcome mat rolled out for Bitmain and other cryptocurrency “miners” in Douglas County contrasts with nearby jurisdictions such as the City of Chelan which voted last month to ban cryptocurrency operations from setting up inside the city. Public utility district commissioners in neighboring Chelan and Grant County have voted to dramatically hike electricity rates for cryptocurrency businesses to protect themselves from what the utilities perceive as a “high risk” sector.

Through a subsidiary, Bitmain has secured other properties in central Washington. In July, the company signed a short term lease with the Port of Walla Walla for 10 acres of undeveloped land near Wallula, Washington. On Friday, Stearns said his company may let that lease lapse at the end of this year because the costs to develop a bitcoin data center on that parcel look to be too high. Separately this year, the Bitmain subsidiary purchased industrial property in Malaga in Chelan County, which Stearns said has been converted into an electronics repair facility.

The Port of Walla Walla lease attracted opposition from area residents this past spring who objected to the energy-intensive nature of cryptocurrency mining.

“Cryptocurrency mining, which generates few jobs, is a dangerous business model that makes a product of highly questionable and unpredictable value and contributes nothing for the good of the Earth or humanity,” wrote critic Bob Carson, a professor emeritus, in an op-ed in the Walla Walla Union-Bulletin newspaper. “Computers used for Bitcoin mining are specifically designed to solve meaningless math puzzles in the hopes of generating more Bitcoins. I consider bitcoin mining to be legalized gambling. Cryptocurrency is used for criminal activities such as money laundering.”

Beijing-based Bitmain is privately held. According to financial statements filed in Hong Kong in advance of a planned initial public offering, the cryptocurrency giant earns most of its revenue from selling virtual currency mining machines. Bitmain keeps some of the hardware it makes to install in its own data centers such as the one that just opened near East Wenatchee. Stearns said his company is also branching out into artificial intelligence, although that activity is not happening in Washington state for now. Stearns said the East Wenatchee facility will employ about 20 people.

Copyright 2018 Northwest News Network

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File photo. Chelan County Public Utility District managers want to shut down unauthorized bitcoin operations. CREDIT: XIANGFU/WIKIMEDIA

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Bitcoin mines -- or data centers -- are popping up near the Wenatchee airport among other places. Some are installed inside used cargo containers, which local councils increasingly are banning for this use. CREDIT: TOM BANSE

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