Cheney council OKs second cyber mining deal

For the second time in just over two months, the city of Cheney is signing an agreement to supply power to a cyber currency mining business.

The City Council approved an electrical power and service contract with Willow Street Mining, Inc., at its May 22 meeting. According to the resolution, Willow Street Mining is “developing a data processing center which will add a new large load” as defined by the city’s municipal code.

The code also requires the City Council to set a specific rate for any new large single loads that are different from all other customer class uses. The location of the proposed data center is at 2416 Cheney-Spokane Road is the former AMX/Harman electronic components manufacturing facility.

At its March 13 meeting, the council approved two separate resolutions with BitPro, a bitcoin mining company also setting up shop in the former location AMX/Harman site. AMX/Harman began shutting its doors in May 2017, officially letting its final Cheney employees go in October.

Bitcoin is a cyber currency backed by no centralized government or bank, such as the dollar is by the U.S. government through its production and financial backing. Mining bitcoins is complex, requires a lot of math, special computer programs to analyze transactions — and a lot of power.

So much power that the City Council passed a moratorium on these operations at its April 24 meeting until regulations can be developed to protect the city’s electrical system from harm. The six-month moratorium runs to Oct. 24, but can be extended another six months if needed. The city must hold a public hearing on the ordinance within 60 days of its adoption.

Light Department Director Steve Boorman told the council at the May 22 meeting that the commitment to Willow Street Mining came prior to the moratorium being implemented. Like the contract with Bitpro, the Willow Street Mining agreement calls for the operation to prepay two months of estimated billing, with the initial prepayment amounts being based on installed capacity of $77,000 for one megawatt, $155,000 for two megawatts and $232,000 for three megawatts.

Boorman said the city’s power system has the capacity to handle another megawatt of power.

“What about the second and third (megawatts)?” Councilman John Taves asked.

“That is the open question,” Boorman replied.

How those additional megawatts are accounted for is contingent upon what legislation is produced from the city’s moratorium and review process. Taves said he was still concerned, but would defer towards approval of the contract.

Council also approved a pair of contracts for street-related work this summer. The first was a $839,551 award to Shamrock Paving for work on the city’s 2018 Street Preservation Project.

The bid was in three schedules for arterials and street repairs along with overlays at the city’s wastewater treatment plant, the Utility Building and nearby Pine Street. Public Works Director Todd Ableman said the grouping projects made the bid request more attractive.

“You compile all that, and asphalt contractors are looking at high tonnage,” he said.

Also approved was a $40,100 contract with Five Star Concrete, Inc. for sidewalk removal and replacement work in several areas of the city. Ableman said the amount is higher than the engineering estimate and similar work performed last year, but within projections.

Finally, the council elected to remove a resolution from the agenda that would have authorized the police department to waive the competitive bidding requirements in order to “acquire a used sedan to replace an unsafe detective vehicle” currently being used.

“We found another solution for that,” City Administrator Mark Schuller said.

John McCallum can be reached at jmac@cheneyfreepress.com.