New York regulator approves new rates for crypto miners
New York state’s utility regulator approved on Thursday measures to allow a power distributor to charge negotiated tariffs to attract high load users such as cryptocurrency miners.
The Public Service Commission of New York said it had approved new electricity rates for Massena Electric Department, an upstate power utility. These individual service agreements would allow high-density load customers, such as cryptocurrency miners, to negotiate their tariffs.
Under the new rules, individual service agreement tariffs would be available if a user’s maximum demand exceeds 300 kilowatts and if the customer provides benefits to the utility.
Benefits for both sides
Given the large amount of underutilized electricity due to the abundance of hydroelectric production in New York state, power rates are much cheaper there than in many other US states and has, therefore, attracted an abundance of cryptocurrency mining operations.
Cryptocurrency mining is highly energy intensive and guarantees greater revenues for power companies, and so they are keen to attract such users. Meanwhile, the possibility that crypto miners could reduce their costs make mining in New York state an attractive proposition.
“As part of our continuing effort to balance the needs of existing customers with the need to attract new companies, we must ensure that business customers pay a fair price for the electricity that they consume,” said John Rhodes chair of the Public Service Commission.
He added: “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.”
Further agreements likely
The Commission noted that in recent months several municipal power authorities had received an increasing number of requests for individual service agreements from new customers who need disproportionately large amounts of power.
“These requests come mainly from similar types of potential customers: server farms, generally devoted to data processing for cryptocurrencies,” the Commission said.
While these new customers typically use thousands of times more electricity than the average residential customer, the agreements include provisions that protect existing customers from increased supply costs.
New York will want to avoid the lesson learnt by Canadian power company Hydro-Quebec, however.
It also had a surplus of power due to the many hydro-electric projects in the province and courted cryptocurrency miners. The response was “unprecedented”, the company said, and now faces such high demand from crypto operations that it is seeking approval to raise their rates.