John B. Rhodes, chair of the New York State Public Service Commission said on Thursday that cryptocurrency miners will be subject to higher electricity rates than normal businesses. The new ruling is supposed to come into effect before the end of the month leaving cryptocurrency mining firms with a difficult choice as to whether they pack up and relocate to a state with cheaper electricity.
The ruling was hurried forward by the New York Municipal Power Agency, a body of 36 municipal power authorities in New York. Their petition stated that crypto mining would increase the average utility bills for local residents while not generating any real value for the state in return.
The announcement stated:
“While such a significant amount of electricity usage might go unnoticed in large metropolitan areas, the sheer amount of electricity being used is leading to higher costs for customers in small communities because of a limited supply of low-cost hydropower. In Plattsburgh, for example, monthly bills for average residential customers increased nearly $10 in January because of the two cryptocurrency companies operating there.”
Mining Profit Margins Shrink
As cryptocurrency prices keep falling the players in the once lucrative mining business are now struggling to break even. The influx of new miners has increased the global hash rates for all of the mineable crypto-assets which means the average miner has greater competition.
The lighting company Elite Fixtures has recently estimated that it costs over $25,000 to mine a single bitcoin in places such as South Korea that have expensive electricity. As the profit margins for Bitcoin mining diminish the hash rate will start to drop, bringing the industry back to an equilibrium – in theory.