In a move that could hike power costs 60 percent for businesses that mine kryptocurrencies, the New York Public Service Commission (PSC) gave municipal power authorities permission to charge those businesses more for electricity than other, less energy-intensive customers.
Cryptocurrency mining, in which miners solve complex math problems to earn currencies such as Bitcoin, is an energy hog. ?As a direct result of the intense computer data-processing efforts, these companies are using extraordinary amounts of electricity ? typically thousands of times more electricity than an average residential customer would use,? the PSC said in a release announcing the decision.
The commission was responding to a request from the New York Municipal Power Agency (NYMPA). NYMPA members were concerned that cryptocurrency miners were using up low-cost energy that is supposed to be used by job-creating businesses.
?NYMPA?s petition noted that these customers do not bring the economic development traditionally associated with similar load-sized companies,? the PSC reported.?
Further, the energy use by cryptocurrency miners is so intense that it has driven up the cost of energy for neighboring businesses and residents.
According to the PSC, monthly bills for the average residential customer in Plattsburgh rose $10 in January because of the demand created by two cryptocurrency companies operating there.
Cryptocurreny mining is so energy intensive, powering racks of computers in a server farm, that in some cases, the business can account for one-third of total energy demand, the PSC said. In comparison, it noted that a large paper manufacturer uses only one-fourth as much power per square foot as a cryptocurrency company.
NYMPA, which is headquartered in DeWitt, told the PSC that there are at least three cryptocurrency companies operating in upstate New York.?
NYMPA General Manager Tony Modafferi says that job-creation claims made by cryptocurrency companies when they seek to build in an area with low-cost energy can be misleading. While a factory may bring hundreds of permanent jobs, cryptocurrency mining requires construction workers, installers and others to get things running, but few permanent jobs. ?Let?s justify what the jobs are,? he says.
The ruling will allow municipal power authorities to set a separate rate for high-density load customers that do not qualify for economic-development assistance and have demand that tops 300 kilowatts. That, the PSC said, is far higher than traditional commercial customers use.
The rates could rise starting in March, while rates for other customers will return to prior levels, the PSC said. That change can bring significant results. The PSC said that had the newly allowed rates been in place in January, the cryptocurrency companies in Plattsburgh would have paid 60 percent more for electricity.
?We always welcome and encourage companies to build and grow their businesses in New York,? said PSC Chair John B. Rhodes. ?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.?
Cryptomining uses a lot of electricity
While some are content to trade cryptocurrencies, an entire industry has been created that mine Bitcoins by solving complex equations. To solve the equations, cryptocurrency companies run server farms with hundreds of computers.
As Bitcoin?s value skyrocketed in the past year, it made economic sense to expand operations, adding equipment and hiking electricity use. Researchers have estimated the cost of electricity per Bitcoin mined at far less than the current market value of the cryptocurrency.
Morgan Stanley Research estimates demand for electricity from cryptocurrency mining had grown to rival the demand of some nations. ?Currently, global power demand from cryptocurrency mining hovers at about 22 terawatt hours,? the firm reported in January. That amount of electricity ? 22 trillion watts ? is roughly the same as used by the country of Ireland.?
? Charles McChesney