New Tariffs For New York Crypto-miners

New Tariffs For New York Crypto-miners

 New York applies tariffs to cryptocurrency miners to prevent inflated electricity costs to residents.

New York applies tariffs to cryptocurrency miners to prevent inflated electricity costs to residents.

The New York Public Service Commission ruled yesterday that municipal power authorities in upstate New York are permitted to charge increased rates to companies mining cryptocurrencies. This comes due to the large amounts of electricity required to mine cryptocurrencies, and was enacted 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." Commission Chair, John B. Rhodes further explained:

We always welcome and encourage companies to build and grow their businesses in New York...However, we must 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. If we hadn’t acted, existing residential and commercial
customers in upstate communities served by a municipal power authority would see sharp increases.
in their utility bills.”

The New York Municipal Power agency (NYMPA) (an association of 36 municipal power authorities in New York) petitioned the Commission upon concerns the "high-density load customers, such as cryptocurrency companies, were having a negative impact on local power supplies". This region is of interest to cryptocurrency miners due to its low-cost electricity, made available by NYMPA, which distributes power (mainly hydroelectric) to customers at zero profit. It was reported that mining companies' use of electricity is often thousands of times more than the average resident consumes. Because hydroelectric power has a limited supply, a mass increase in regional power use has resulted in greater costs to the small communities, in which these mining companies operate. It is noted that in Plattsburgh, the existence of just two cryptocurrency mining operations, caused the average resident to see an increase of nearly $10 increase in their January electric bill. 

Aside from the major increase in electricity demand for these communities, concern comes from the issue of these companies offering few jobs (in relation to other industries requiring similar demand for power), and little to zero capital investment in the communities they occupy. With little invested in their chosen locales, these companies can quickly and easily relocate to similarly-beneficial communities, leaving their previously occupied communities with unpredictable fluctuations in electrical use. 

With these concerns accepted, the Commission has come to this conclusion:

To mitigate the impact on existing customers, the 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.

If these tariffs had existed in January, the two operating factions in Plattsburgh would have incurred a 60% increase in the cost of their electricity usage, and the citizens' costs would have remained the same. For full disclosure of the decision, please click the link here

Update: The city of Plattsburgh, NY has imposed an 18 month ban on commercial cryptocurrency mining. 

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