The promise of a new cryptocurrency-mining company in downtown Paducah has ended somewhat abruptly.
Mayor George Bray recently confirmed that Griffin Blockchain Services, Inc. is leaving Paducah.
“They’re chasing lower electrical rates,” Bray said.
In November, 2021, Griffin Blockchain acquired the 120,000-square-foot former AmerisourceBergen facility on North Third Street. The building is now up for sale.
“They’re looking for more rural sites in the surrounding areas, but unless they find it in McCracken County, it won’t be a benefit (to us),” Bray said.
When China banned cryptocurrency in 2021 — citing financial crime and economic instability — Kentucky became an attractive alternative due to statewide legislation offering tax breaks to miners.
The state enacted a law in 2021 granting sales tax and use tax exemptions on commercial property and electricity used by blockchain companies for the purpose of mining cryptocurrency.
However, recent world events may have contributed to the company’s decision to locate elsewhere.
“It’s tough in this market: What’s going on overseas in Ukraine, the uncertainty around the markets right now — the uncertainty of electricity rates, in particular,” Bray said.
“I think it dawned on them that they needed a more rural location, and we’re all on a learning curve with this market.”
Doug Handley is director of finance, power supply and rates for Paducah Power System.
“We have a rate that is available to any customer that meets certain criteria, and that rate was tailored for crypto-miners because it requires you to have a least 1 megawatt of load and requires you to have 95% load factor and it requires you to be interruptible,” said Handley.
“And, they met all those criteria. In exchange for meeting those criteria, they get a market-based, adjustable rate which means we pass through to them our actual cost of power, plus the loss factor, which is really our actual costs. So, what has happened in the marketplace is they came in and bought a building and set up shop and them came to us and said they wanted a rate,” he said.
“We told them what we had and they said ‘okay’ but I don’t know if they fully understood the fact that it was based on the market and the market can change. And, it did .. it changed very unfavorably and it’s not our fault.”
Griffin Blockchain representatives didn’t respond to an interview request.
The company specializes in mining Bitcoin. To earn Bitcoin, companies or individuals use computer hardware to perform an algorithm — i.e., a step-by-step procedure to perform a calculation — in a process called mining.
As miners earn Bitcoin, the algorithm becomes more complex, necessitating more advanced hardware and higher energy needs.
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