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New York green-lights higher energy bills for upstate cryptocurrency miners

New York is clamping down on cryptocurrency companies and miners by allowing upstate municipal power authorities to charge higher electricity rates for these energy-intensive customers.

The New York State Public Service Commission unanimously approved an emergency rider tariff proposed by the New York Municipal Power Agency, or NYMPA, that seeks to shift the cost burden of cryptocurrency mining to those that are responsible. NYMPA, an association of 36 municipal power authorities, proposed the tariff to prevent local electricity prices of their 36 members from skyrocketing for residential and other business customers due to soaring local demand for electricity.

"I don't have any problems with cryptocurrency miners and I don't have any problems with them getting good rates for their power they need for their operation," Commissioner Gregg Sayre said. "But where there are problems is when … their operations impose potentially huge purchase power costs on everybody else."

Sayre said the "Rider A" tariff offers a simple solution by fixing the rate design. The tariff is being adopted on an emergency basis under New York's State Administrative Procedure Act.

The new tariff applies to high-density load customers that are draining local power supplies to support massive data-processing operations of their computers to create, or "mine," digital currency such as bitcoin. As a result, the digital currency developers are forcing customer-owned municipal utilities to purchase higher-priced electricity off of the open market, NYMPA argued.

An official from the state Department of Public Service explained that the lower-cost of municipal electricity, typically generated by hydropower, are attracting cryptocurrency miners to the upstate region. For instance, NYMPA relayed that the village of Akron in Erie County received a request to serve a 5-MW cryptocurrency company. "This would increase power supply costs by 54% [and] equates to a total bill increase for existing customers of 30%," said the DPS official.

The new tariff is applicable to 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 a year. Costs for high-density load customers will increase beginning in March, while costs for non-high-density load customers will return to their previous levels. Had the new rates been in place in January, the two cryptocurrency companies in Plattsburgh would have seen a more than 60% increase in their monthly electricity costs.

According to NYMPA, there are at least three cryptocurrency companies operating in upstate New York.

In Plattsburgh, N.Y., for example, monthly bills for average residential customers increased nearly $10 in January because of the two cryptocurrency companies operating there, the PSC said in a statement. If the tariff had been in place starting January, the two Plattsburgh-based cryptocurrency companies would instead have seen their electricity costs increase by more than 60%.

The tariff also includes various safeguards, including a requirement that Rider A customers provide upfront funding for 100% of any required infrastructure investment costs. In addition, the tariff requires a security deposit from cryptocurrency companies and individuals to protect other consumers, in the event a Rider A customer fails to pay their final electricity bill.