Blockware Mining CEO Michael Stoltzner, center, answers a question from members of Kentucky’s interim joint committee on economic development and workforce investment last week in Frankfort. Looking on is, at left, Jeremy Witten, Blockware’s executive vice president of engineering, and Bruce Wilcox, president/CEO of Greater Paducah Economic Development.

A three-person panel representing a Paducah cryptocurrency project recently addressed a Kentucky legislative committee on economic development and workforce investment about the benefits of the emerging industry.

Bruce Wilcox, president/CEO of Greater Paducah Economic Development, along with Michael Stoltzner and Jeremy Witten, CEO and executive vice president of engineering, respectively, of Blockware Mining, were in Frankfort last Thursday updating members of the interim joint committee.

“Most of you are aware that we in Kentucky are very fortunate and very blessed to have some of the most affordable power rates in the country, even the world,” Wilcox said.

“We have a very sophisticated, very reliable utility infrastructure and particularly in our far western portion of the state, we are right in the center of the MISO (Midcontinent Independent System Operator) grid, a network of electric providers that runs all the way from Canada down to the the gulf and there are a lot of transmission lines that intersect in western Kentucky.”

That location, along with the recently-passed Kentucky legislation that abated sales and utility gross receipts taxes on electric bills have driven a lot of interest in cryptocurrency mining projects, Wilcox said.

“We’ve seen crypto inquiries from the East Coast all the way across to California and up into Canada. I’ve talked to crypto interest in China, even in Greece,” he said.

Wilcox provided the committee information on the current Blockware project under development in Paducah’s Industrial Park West.

“The first phase is a 30-megawatt project. We certainly hope to be able to entice them to put an additional 30 megawatts there, to get them up to the 60-megawatt project we’re looking to secure,” he said.

“That will end up being about a $50 million project and we believe it will ultimately result in the hiring of 20 full-time employees. We also have another unannounced project in our community that has multiple locations, and when all is said and done, will be about 15 megawatts of electricity and about a $15 million capital investment and about five employees.”

Wilcox said the crypto projects are generally cash collateralized.

“As the power companies are able to sell more megawatts, that enables them to produce more electricity and it allows them to spread those costs out over more megawatts. Over time, we believe as these power companies embrace and engage with more crypto companies we’ll see the fixed cost charge per customer actually decline,” he said.

“It will also generate additional cash flow for future investment in our utility infrastructure and it will enable our power companies to service and manage their debt more appropriately. So, we’re excited about having Blockware in our community.”

Stoltzner said what companies like Blockware are doing “is actually bring industry back to the Midwest, back to areas of the country that had lost steel mills and industry of the 1900s.

“A lot of the facilities that are being used for mining facilities (basically a data center) are old mills that have been shut down, from Kentucky to the east and so forth.”

A year ago, China controlled 65% of the hash rate (speed at which cryptocurrency miners operate) in the world and the Unites States, 7%, Stoltzner said. Today, the U.S.% is 19 and growing.

From the standpoint of workforce development, Stoltzner said Blockware has begun hiring, with salaries ranging from $18 per hour with full benefits to tech jobs in the $70,000-plus range with benefits.

Kentucky is currently the second largest bitcoin mining state in the country, behind Texas, he said.

Witten said when he was first introduced to bitcoin four or five years ago he had some of the same questions members of the committee were asking.

“Coming out of the alloy industry, I would never have dreamed of being introduced to bitcoin. But through learning and seeing the application and seeing how the industry has evolved, it has mutual benefit. That’s were I see the value, and as the future progresses the value will continue to increase,” he said.

“Kentucky is centrally located in the hub of all industry, both of the (interstate) 65 corridor, and 75 and 24. Over the years we’ve lost a lot of heavy industry, with a lot of jobs that come with that. But we also have an opportunity to harness this industry and establish basically a technology hub for this industry.

“Kentucky has access to three different independent system operators, MISO, PJM and TVA. There’s not another state that has three, so Kentucky offers very diverse opportunities to go around the state and benefit both large and small communities.”

Follow David Zoeller on Twitter, @DZoeller_The Sun

Follow David Zoeller on Twitter, @DZoeller_The Sun

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