Australian Power Plant Resurrected to Mine Cryptocurrency

Cryptocurrencies, News

The Hunter Valley region of New South Wales, Australia, has two associated industries that might make it the Australian version of Silicon Valley: coal mining and electricity generation. One of the many coal-fired powered stations in the region, Redbank, was forced to close in 2014 on the instruction of the receiver appointed by the operator’s secured lenders.

Redbank Energy Limited (REL) sold the power station to one of its subsidiaries, Biogreen Energy Pty Limited, in 2015. The expectation was that it would be converted to run on biofuel, but the plant has been mothballed ever since Biogreen took it over. The Sydney Morning Herald announced April 10, 2018, that the power plant should finally reopen in Q1 2019 to provide cheap electricity to blockchain-related businesses.

The announcement reads “IOT Group has signed an agreement with Hunter Energy to build a blockchain center inside the Redbank coal-fired power station to provide cheap electricity for blockchain applications.” Even though it doesn’t explicitly state that the businesses will be mining for cryptocurrencies, like bitcoin, it’s safe to assume they will as electricity is the most significant cost for crypto miners.

When Redbank was operational, it had a capacity of 150 MW, and the new blockchain center to be established at the site is expected to use 10 to 20 MW. Initial indications are that the power plant will use coal from the nearby mines, but that in time it will be adapted to use solar energy. Consumers in the area typically pay 22 US cents per KWH which is considerably more than places like Iceland, USA, and China where costs can be less than 10 US cents per KWH. By locating the crypto miners before the grid and receiving electricity at wholesale prices, the miners should be able to reduce the costs to just six US cents per KWH in the day and a very competitive four US cents per KWH during the night.

Australia is generally pro-crypto, but it has been held back from mining on a large scale due to the cost of electricity in most regions. If the Redbank power station can be resurrected and the expected costs confirmed, it should prove to be a massive boost to crypto miners in the New South Wales area.

Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.

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