New York just cracked open a door for electricity-sucking cryptocurrency miners to take advantage of some of its cheapest power supplies.
State regulators approved a new rate structure Thursday for one upstate utility that will allow miners interested in running operations there to negotiate contracts. Massena’s municipal utility will review the contracts individually while shielding the rest of its ratepayers from increased costs. Just four months earlier, New York cleared 36 other municipal power authorities to charge miners a higher rate than that paid by other customers.
New York is among the hydro-rich regions of the world that cryptocurrency miners have targeted in a search for cheap power. From Quebec to Iceland to China, locals are raising concerns that miners will soak up low-cost hydropower supplies and raise power bills for everyone. That’s left governments including New York trying to strike a balance between attracting new business and protecting residents from rising energy costs.
“We must ensure that business customers pay a fair price for the electricity that they consume,” New York State Department of Public Service Chair John Rhodes said in a statement Thursday. “However, given the abundance of low-cost electricity in Upstate New York, there is an opportunity to serve the needs of existing customers and to encourage economic development in the region.”
A month ago, Quebec decided to triple electricity prices for cryptocurrency miners as it figures out how to manage the industry’s surge in demand. That’s even as power supplier Hydro-Quebec has courted miners to come there and take advantage of the bounty of power coming from the dams of northern Quebec.
Pennies for Power
Hydroelectric dams built decades ago have allowed municipal utilities in upstate New York to supply power to their customers for just pennies per kilowatt-hour. In Massena, residential customers pay an energy charge of about 3.9 cents a kilowatt hour. For comparison: Residential electricity prices average almost 13 cents nationally.
In March, Plattsburgh, a small lakeside city in upstate New York, became the first to impose a moratorium on the nascent and power-hungry currency mining operations for 18 months. It was charging them an average of 2.6 cents a kilowatt-hour at the time. The state Department of Public Service cleared an association of 36 municipal power agencies, including Plattsburgh’s, at about the same time to charge miners higher rates because of the huge volumes of electricity they use.
This story first appeared on Bloomberg.