For miners of cryptocurrencies it will be expensive in the US state of New York. Electricity suppliers may demand significantly more money from them. The relevant Public Utilities Commission now allows the 36 local electricity suppliers separate tariffs for small companies with extreme power consumption. Regulation will come into effect in March.

Outside the metropolis of New York City, the state of the same name is very sprawling and sparsely populated. Forest and water characterize the landscape. The well-known Niagara Falls are located in the far north of the state. Residents buy electricity from hydroelectric power plants at very low prices in the area. This location advantage has attracted increasing numbers of miners in recent years. The New York authorities speak more generally of "cryptocurrency companies."

For private households, the costs rose noticeably according to the official publication. For example, residents of the small town of Plattsburgh (population 20,000) will have to spend an average of $ 10 per month on their electricity bills each month. So far, a kilowatt hour for companies cost just under 2 cents. Residents had to pay about 4.5 cents per kWh. The national average is 10 cents per kWh.

Miners drive up electricity costs, according to authorities

Rising electricity prices are an onerous topic in the economically less prosperous rural areas. The culprits are identified: server farms that are primarily used in connection with cryptocurrencies. Consumption is enormous: in some municipalities these companies consume up to one third of the total electricity supply. Plattsburgh has now imposed an 18-month memorandum against new crypto companies.

In order to ensure the high consumption, the electricity suppliers have to expand reserve capacities. That requires high investment. These are usually allocated to all consumers and beaten over many years on the price of electricity. The fear of local utilities and politicians is now that companies are packing their equipment on trucks and moving on, even before the investments have paid off. There is no local affiliation or investment. In contrast, the local companies and residents remain sitting on the investments. Investments that nobody needs anymore.

Higher electricity costs for miners to relieve others

The report primarily criticizes the low level of local economic investment, while companies benefit from low electricity costs. While mining companies are very flexible, a power supply must be planned for the long term.

Known by scientists as a free-rider problem, businesses benefit at the expense of the community. A problem that often occurs in goods where individual groups can not be ruled out. That changes now. Although the power is not turned off, but for the first time strongly interfered with the regulation. The New York Municipal Power Agency (NYMPA) filed a complaint with the relevant regulator as the representative of the 36 local electricity providers. They want to set a separate electricity price for these companies. In other words: discriminate against the electricity price and demand more from those who can pay more.

In this case, the electricity providers have a regional monopoly position. That makes the situation complicated. Unlike free competition, companies have few alternatives in a monopoly. From the point of view of the local population, price discrimination is unquestionably desirable and comprehensible. But something surprising in a country that speaks out against regulation and relies on freedom.

New York: Not the first case of price discrimination for miners

There has already been a similar, not so drastic, rule in Washington State in the past. However, Iceland, which is comparable to the state of New York, can also be found in Iceland: the population benefits from low electricity prices from water and wind power. There too many crypto companies have settled there. For the first time this year, the consumption of these companies could exceed that of the entire population. This also clearly shows the burden on the environment and electricity grids. The only question is what a fair and equitable response to rising electricity consumption can look like.

Historic, locally-based businesses, according to the regulator's report, create jobs and enliven the region. An investment in the local power grid for such traditional businesses also strengthens the economy and is therefore in the interest of the community.

Everyone is pulling together here, politicians, residents and authorities. They all unite a clearly defined enemy image: no one of the residents would benefit from the crypto companies - they would even lose. This is also in line with Commission Chairman John B. Rhodes' statement: "We welcome and motivate companies to build and expand in New York." "But," they say, they also have to "pay a fair price for electricity." The word "appropriate" seems to correlate strongly with the number of employees in the company.

Electricity costs will be 60% more expensive

The new rule is not limited in theory directly to companies in the context of crypto currencies, but defines the consumption per unit area. In practice, however, these are just companies in the crypto-business. Affected are companies with a consumption load of more than 300 kW and a consumption of more than 250 kWh per square foot (equivalent to about 0.1 m²). Excluded from this rule are companies that are economically significant for the region.

What does that matter? A company in Plattsburgh would have had to pay around 60% more for the electricity bill since January, the report estimates. In the next few days, operators will adjust their prices and it will become clear how extreme the adjustments will be. It certainly remains exciting, whether the electricity bills for private consumers will fall again.