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[UPDATED] Electricity Tariff For Some Cryptocurrency Miners Approved In New York




Municipal power authorities in upstate New York have received permission to charge certain cryptocurrency mining enterprises higher rates for the use of their electricity than they charge other customers.

UPDATED | March 19, 2018:

On March 15, 2018, Plattsburgh, one of several locales effected by the New York State Public Service Commission's decision to grant municipal power authorities permission to create electricity tariffs, passed a local law forbidding any new commercial cryptocurrency mining operations.

Mayor Colin Read stated that the sudden demand for Plattsburgh's relatively cheap power has forced the city's Municipal Lighting Department to buy power from elsewhere, dramatically increasing energy bills, such as those for local Tom Recny, who attended the council hearing. "I'm the Chief Financial Officer with Mold Rite Plastics," Recny explained, saying, "Our bill last month went up $22,000 as a result of the increase in the price."

"My goal is to protect the ratepayers," responded Mayor Read.

City Council members say that the 18-month ban enacted with the goal of giving the city more time to craft rules for mining outfits and manage soaring costs to consumers – may terminate early if the council can develop legislation to "stop the bleeding," per Councilor Patrick McFarlin.

ORIGINAL | March 16, 2018:

In an official announcement dated March 15, the New York State Public Service Commission revealed that it has granted upstate municipal power authorities permission to create electricity tariffs that they may impose on the entities behind some cryptocurrency mining operations, starting this month.

The statement, from the office of commission chair John B. Rhodes, explained that certain upstate municipal authorities have recently been receiving interest, and in some cases patronage, from large-scale cryptocurrency miners. It notes that as a "direct result of the intense computer data-processing efforts, these companies are using extraordinary amounts of electricity." This consumption "might go unnoticed in large metropolitan areas," but it is "leading to higher costs for customers in small communities because of a limited supply of low-cost hydropower."

In other words, the decision was intended to "level the playing field and prevent local electricity prices for existing residential and business customers from skyrocketing due to the soaring local demand for electricity."

Cryptocurrency mining is more profitable when the cost of electricity is lower. While relatively cheap electricity has a tendency to attract commercial miners, some of the utility providers have found that meeting the demands of such entities affects their ability to supply power to existing customers, or at least to do so at a price point that those clients have come to expect.

The tariff may be applied to:

"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."

The commission's decision follows a petition from the New York Municipal Power Agency (NYMPA), a body made up of 36 municipal power authorities, which "represents customer-owned municipal electric systems that acquire low-cost power, typically hydro, and distribute the power to customers at no profit." The organization had apparently identified at least three large-scale mining enterprises in upstate New York.

In its petition, NYMPA contended that mining operations were asking for unusually high provisions of electricity and that they tended to create few jobs and make minimal, if any, "capital investment in the local community."

These complaints are reminiscent of remarks by Quebec Premier Philippe Couillard, who said on March 2 that a hydro-electric utility in the province was unlikely to take on customers who do not offer to add any "value for our society; just having servers to do transaction mining and acquire new bitcoins, I don't see the added value."

The commission's statement on the tariff relates that in "some cases, these customers account for 33 percent of the municipal utility's total load." According to NYMPA, it says, one company requested:

"5 MW of electricity to be added to the Village of Akron, Erie County. If Akron were to comply with the request at existing rates, Akron's annual average bulk power supply costs would have increased 54 percent with a direct impact on retail rates."

Residents of Plattsburgh saw an increase of almost $10 in their January electricity bills, ostensibly as a result of cryptocurrency mining by two companies. The commission's announcement posits that if the tariff had been in effect that month, those firms' monthly electricity bills would have been over 60 percent higher. The city was to hold a public hearing on March 15 to discuss an 18-month moratorium on commercial mining, which its mayor had proposed two weeks earlier.

"We always welcome and encourage companies to build and grow their businesses in New York," Rhodes said, but the commission has a duty to "ensure business customers pay an appropriate price for the electricity they use. This is especially true in small communities with finite amounts of low-cost power available."

Adam Reese

Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam holds value in Ether, Bitcoin, and Monero.

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