New York Cryptocurrency Miners Will Pay a Premium for Electricity
Mining cryptocurrencies like bitcoin in the state of New York will become more expensive as power providers are now cleared to charge higher electricity rates for crypto mining firms.
In a ruling [PDF] on Thursday, the New York State Public Service Commission – the state’s public utility regulator – has allowed upstate municipal power authorities to charge higher power tariffs for companies in the crypto-mining business with high-density loads, from March.
An energy-intensive process, cryptocurrency mining is a process wherein miners are rewarded with coins for creating blocks of validated transactions and adding them to a blockchain using specialized computer chips that draw high amounts of power continually.
The move follows a petition by the New York Municipal Power Agency (NYMPA), a group of 36 municipal power providers in the state, citing concerns of higher electricity costs for residential and business customers due to soaring demand from crypto-mining companies. ‘The addition of high-density load customers can drastically increase the amount of supplemental power needed by the systems and significantly increases costs to existing customers,’ an excerpt from the announcement read.
The petition also argued that cryptocurrency miners ‘do not bring the economic development traditionally associated with similar load-sized companies’ with fewer jobs and ‘little to no capital investment’ among the local community.
In certain cases of power consumption, the cryptocurrency mining firms accounted for a third of the local power provider’s total load, the announcement said, comparing it to “a large paper manufacturer, which might employ hundreds of workers, uses roughly one-fourth the amount of electricity on a per square foot basis that these high-density load customers.”
As a result, the regulator announced:
[T]he Commission will allow municipal power authorities to create a new tariff focusing on high-density load customers that do not qualify for economic development assistance and have a maximum demand exceeding 300 kW and a load density that exceeds 250 kWh per square foot per year, a usage amount far higher than traditional commercial customers.
The move to hike tariffs come within days of officials in the city of Plattsburgh – which falls under the NYMPA’s coverage area – considering a temporary ban on cryptocurrency mining operations locally.
New York power station image from Shutterstock.