New York Power Companies Can Now Charge Bitcoin Miners More (arstechnica.com)

Last Wednesday, the New York State Public Service Commission (PSC) ruled that municipal power companies could charge higher electricity rates to cryptocurrency miners who try to benefit from the state's abundance of cheap hydroelectric power. Ars Technica reports: Over the years, Bitcoin's soaring price has drawn entrepreneurs to mining. Bitcoin mining enterprises have become massive endeavors, consuming megawatts of power on some grids. To minimize the cost of that considerable power draw, mining companies have tried to site their operations in towns with cheap electricity, both in the U.S. and around the world. In the U.S., regions with the cheapest energy tend to be small towns with hydroelectric power. But mining booms in small U.S. towns are not always met with approval. A group of 36 municipal power authorities in northern and western New York petitioned the PSC for permission to raise electricity rates for cryptocurrency miners because their excessive power use has been taxing very small local grids and causing rates to rise for other customers. The PSC responded on Wednesday that it would allow those local power companies to raise rates for cryptocurrency miners. The response noted that New York's local power companies, which are customer-owned and range in size from 1.5 MW to 122 MW, "acquire low-cost power, typically hydro, and distribute the power to customers at no profit." If a community consumes more than what has been acquired, cost increases are passed on to all customers. "In Plattsburgh, for example, monthly bills for average residential customers increased nearly $10 in January because of the two cryptocurrency companies operating there," the PSC document says. The city of Plattsburgh, New York has since imposed an 18-month moratorium on commercial cryptocurrency mining to "protect and enhance the city's natural, historic, cultural and electrical resources."

Comments

Re: How about denying service?

[Luckyo]

That's not going to happen. It's not even remotely cost effective. These people go for places with hydro because hydro is ridiculously cheap once installed.

Solar is expensive. In comparison to hydro right near the dam, extremely expensive.

Cryptominers don't get subsidized rates

[nateman1352]

Keep in mind that the only thing that is really happening here is that only a fixed amount of electricity is available each month at subsidized pricing rates. The only change here is that crypto miners get lowest priority of subsidized power. For example, lets say that every month the city gets 40 gWh of subsidized electricity from their contract with the power company that permitted the construction of a hydro dam within city limits. On a given month, lets say the residential and non-crypto mining industrial buildings in the city use 35 gWh of power, and the miners use 15 gWh. In this scenario, the miners will get 5 gWh at the subsidized rates, but will have to pay regular price on the remaining 10 gWh past the city's quota of subsidized power.

Seems pretty reasonable to me... the miners still get access to some cheap power, so its better than what they would get elsewhere, but at the same time the consequences of their excessive power consumption doesn't end up forcing the residential customers of the city to buy a percentage of their power at full price, which was what happened previously.

Re:Cryptominers don't get subsidized rates

[Solandri]

The bigger problem is that electricity pricing is done locally, while production is done nationally (or even internationally in the case of the U.S. and Canada). That is, your electricity rates depend on the cost of the plants which are nearby you. But the power grid is national. Shortages in one locale are made up by diverting power from a different location. The net result is that if there's a marginal increase in the consumption of electricity, the price the country pays for it is the marginal price for whatever power plant ends up generating that extra electricity. Hydro (and solar and wind) are supply-limited, so can never provide this marginal increase in electricity production. Nuclear plants are slow to ramp up or down, so are usually run at full capacity 24/7.

So the extra electricity used by crytocurrency mining comes entirely from fossil fuel plants. Even if they're located in an area which gets its electricity from hydro, their extra power consumption means there's less hydro power available to send to neighboring locales. That neighboring locale has to make up that electricity shortfall somehow, so a coal or gas plant near them ends up burning more fuel to generate it.

This is why it's pointless building your company next to a renewable power source just so you can advertise that your company is being green. Unless that renewable plant was built specifically to generate power for you (i.e. it wouldn't have been built otherwise), all you're doing is depriving someone else of renewable energy that they would've gotten if you hadn't built your company there. You haven't reduced the country's fossil fuel consumption, you've just pushed your fossil fuel consumption onto someone else just so you can claim the bragging rights of being green when in fact you're having zero net effect on the nation's pollution generation.

It's also why you should try to conserve electricity even if you live in an area with cheap electricity rates (e.g. Pacific Northwest, home of U.S. hydro power). Every kWh of hydro power you don't use is a kWh which gets transmitted to another part of the country, meaning some coal or gas plant somewhere has to generate a kWh less energy, and the air is that much cleaner for it.

Real reduction in fossil fuel emissions comes only two ways - reducing the country's overall power consumption, and increasing the percentage of power generated by nuclear and renewables. Cryptocurrency mining violates the first, so is just bad for the country regardless of where you do it. (Though there is an exception if you can do it during winter in an area which would've used electricity for heating anyway. It doesn't matter if the heat comes from an electric radiator or from a massive bank of GPUs. Both are electricity-in, heat-out at 100% conversion efficiency.)

Re:How about denying service?

[Anonymous Coward]

The crypto miners are using over 1000X more power than the standard home. No household cannabis crop is going to use that much power. FTFA, one miner used 33% of the power for the entire town.

And if you actually read the PSC rule, they didn't increase the rates for cryptominers. They increased the rates for heavy users:
"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."
http://www3.dps.ny.gov/pscweb/WebFileRoom.nsf/Web/52BF38680307E75E85258251006476F0/$File/pr18018.pdf?OpenElement

My house uses about 4 kWh/ft^2 per year. The rule applies to people using 60 times that. No electrical heating (household or weed) will match that.

Re:quebec?

[Anonymous Coward]

From the new PSC rule:
"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."
http://www3.dps.ny.gov/pscweb/WebFileRoom.nsf/Web/52BF38680307E75E85258251006476F0/$File/pr18018.pdf?OpenElement

Heavy non-industrial users were getting same rates as households. Not anymore.