Industry news site Utility Dive, has reported that the New York State Public Service Commission (PSC) has ruled to allow municipal electricity providers the ability to raise rates for bitcoin miners and data centers “to prevent local electricity prices for existing residential and business customers from skyrocketing.”
The reason NY officials chose to let power companies raise electric rates is that 36 municipal power suppliers petitioned the PSC committee. The power companies believe that when data centers and cryptocurrency miners take advantage of the cheap hydropower in the state, average customers lose out. The PSC ruling on March 15th states:
The ruling was needed 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.
According to the commission, cryptocurrency mining operations can use “thousands of times” more than an average residential customer, and in some cases account for 33 percent of municipal utilities’ total demand, without commensurate local economic benefits.
Cryptocurrency mining, a process by which individuals or groups get paid in new Bitcoins to run complex mathematical equations on high-powered computers in order to confirm the validity of transactions, consumes huge amounts of electricity to power servers. This “proof of work” process is part of the security structure of digital currencies like Bitcoin.
Plattsburgh, New York has imposed an 18-month moratorium on Bitcoin mining to prevent miners from using all the city’s cheap electricity.
A small lakeside town in upstate New York is fed up with Bitcoin miners using up so much of its low-cost electricity. The Bitcoin moratorium was proposed by Plattsburgh Mayor Colin Read earlier this month after local residents began reporting wildly inflated electricity bills in January. The moratorium affects only new commercial Bitcoin operations and will not affect companies that are already mining in the city. According to Read, Plattsburgh has the “cheapest electricity in the world” due to a hydroelectric dam on the St. Lawrence river and residents pay only 4.5 cents per kilowatt-hour. (For the sake of comparison, the US average is a little over 10 cents per kilowatt-hour). Industrial enterprises—including Bitcoin mines—in Plattsburgh pay even less: Just 2 cents per kilowatt-hour.