Can Bitcoin Mining Colocation Reduce Renewable Energy Project Risk?

Bitcoin mining facilities and renewable energy projects are unique enough from a risk perspective that underwriters will consider bitcoin mining insurance and renewable energy insurance separately. 

Regardless, bitcoin mining operations and renewable energy projects need real property and casualty insurance to protect their businesses from liability, property losses and loss of income. 

The following are examples of common types of insurance for sustainable bitcoin and/or cryptomining operations to consider:

• Property and Business Income Insurance: Protects your business property from losses such as fire, theft, wind, hail, flood and other common perils. First party losses may happen to commercial solar systems due to weather, such as hail. This can also interrupt the income stream it produces. Bitcoin mining facilities are expensive to replace as the cost of ASICs today range from $10,000-$15,000… Some facilities have thousands of ASIC miners on-site worth millions of dollars that would be hard to replace in a catastrophe. Business property insurance covers business personal property (BPP) and business interruption (BI), tenant improvements and other first party property. Property insurance is sometimes packaged together with general liability insurance in a business owner’s policy (BOP).
• Commercial General Liability (CGL) Insurance: The standard CGL policy is the lynchpin of a business insurance program. The CGL protects the company from claims of bodily injury or property damage to third parties that are caused by your company’s operations. If a person walks onto a jobsite and is burned or electrocuted, or slips and falls or is hit by falling debris caused by your workers in the course of your business your CGL policy would protect you in a lawsuit. Your CGL should also provide protection for products and completed operations and liabilities you assume when entering into a contract that contains a hold harmless. Products and completed ops covers damage caused by products your company sells, such as solar panels or the construction of the system. However, products or property owned by others that are in your care, custody and control of an insured – such as mining equipment of others – are usually excluded under the standard ISO CGL policy form. This gap in coverage can be addressed by inland marine coverage or bailees coverage.
• Hired and Non-Owned Auto Insurance: Auto insurance protects your business from liabilities and physical damage to the vehicles that your business owns… However, hired and non-owned auto insurance protects companies when their employees use their own vehicles for work. Hired and non-owned auto (aka “HNOA”) protects your business from liability claims related to the use of vehicles you hire or do not own, such as a rented vehicle or your employees’ vehicles.
• Builder’s Risk: Builder’s risk, also called “course of construction” insurance, is a type of property insurance that protects real property assets, such as homes or buildings, while under construction. Builder’s risk insurance is important because it protects property being built while the job site is active. A builder’s risk policy may be paid for by the general contractor, developer or project owner. Builder’s risk is often broader than inland marine coverage, or a property floater, or construction floater. 
• Inland Marine: Inland marine is a type of property insurance that covers the tools and equipment that may be used in the construction of a bitcoin mining facility… Inland marine covers property while in transit and also at jobsites, even if it stored remotely (be sure to read your policy location coverages and exclusions). If equipment is stolen from a jobsite, or damaged, its value can be covered by an inland marine policy. Inland marine may also be referred to as a “floater” policy and may be required for distributors by companies such as SunPower or by lenders.
• Cyber Liability: 1st and/or 3rd party protection from damage, or exposure of personally identifiable information (PII), electronic property, digital assets, valuable data and other non-physical assets. May cover ransomware, named and unnamed malware, social engineering/phishing, invoice tampering, hacking and services related to cleanup after a breach. Bitcoin mining facilities that earn bitcoin from renewable energy projects, or manage payment distributions and collect revenue from offtakers are exposed to systems being hacked or taken offline by a cyber attack. In the spring of 2019, hackers hit Sustainable Power Group, (aka “sPower”) one of the largest renewable energy developers in the U.S., with a denial of service attack. Hackers gained access to sPower’s infrastructure through a low-level attack on an unpatched firewall from Cisco Systems.
• Parametric Insurance For Cloud Service Downtime: Mining operation uptime is money. If your business relies on a central cloud storage provider, such as AWS, Google Cloud, Microsoft Azure, etc. your business income may be interrupted if the provider experiences downtime. Certain cloud service regions are more reliable than others. Parametric business interruption insures your hourly earnings and can pay you if you experience downtime, with no deductible. For instance, if your mining operation earns $240,000 per day, you can insure $10,000 per hour of business income, per hour, up to $1,000,000 as the result of a cloud service downtime.
• Professional Liability: Also known as technology errors and omissions, or E&O, professional liability (aka “errors and omissions”, or E&O) protects you if your firm provides bitcoin or crypto-mining consulting or mining integration services. If you design renewable energy mining systems you may need professional liability. E&O covers 3rd party claims related to professional consulting services and the providing of expertise, advice or counsel. Some engineering, procurement and construction (EPC) contractors have full-time installation and engineering crews on staff – whereas others sub-out everything and act more like a general contractor. If your company provides design or consulting services, such as electrical line drawings or structural plans for solar projects, you have some professional liability exposure.
• Workers Compensation: Workers compensation covers injuries to employees who are injured while in the course of their employment. Workers compensation is mandatory in most states. If work related injuries fall outside of workers compensation, they may be covered by your employer’s liability policy. Solar companies have had challenges with workers compensation because underwriters often misunderstand the actual exposures in different types of solar EPCs, virtual GCs, solar sales organizations and sub-contractors.
• Umbrella: Umbrella or excess coverage provides an extra layer of protection to the insured if the primary layers of coverage are exhausted by a large claim. Be sure to have your umbrella insurance be “follow form”. Umbrella insurance is often less expensive than general liability because the underlying general liability limits must be exhausted before the umbrella will kick in. $1,000,000 of umbrella coverage is common. However, limits of $5,000,000 and up are common for large renewable energy projects.

Regardless of the exposures in your specific project, you should work with an insurance broker who understands the renewable energy and crypto mining business.