By Noah Solomon, Senior Research Analyst –
Bitcoin. Dogecoin. Ethereum. These and many others like them are examples of cryptocurrency, decentralized digital currencies that are all the rage right now. Bitcoin, the most well-known cryptocurrency, is endlessly discussed – its benefits, drawbacks, uses and worth.
What is not quite as popular to discuss is how you get cryptocurrency — mining — and the impact of cryptocurrency processing. While it’s beyond the scope of this blog to discuss the process of mining in depth, cryptocurrency miners have been busy disrupting and making waves in a variety of industries, including computer hardware.
Another less-discussed impact of cryptocurrency mining is its energy-intensive nature — mining takes a massive amount of electricity, and this creates problems for utilities. Specific estimates vary, but global energy use by cryptocurrency miners is gauged to be between 18.4 and 57 TWh worldwide.
With such significant usage among this group, utilities are beginning to see the impact, especially those with large amounts of hydroelectric or other renewable generation, as it tends to be cheaper than more traditional sources. Cryptocurrency miners are increasingly moving to areas with cheaper electricity, bringing industrial-sized electricity consumption without the benefits of jobs or other positive impacts typical of industrial and commercial firms.
This is especially problematic for municipal utilities, as they are customer-owned and distribute power at no profit. So what, if anything, can utilities do to address this?
It was on the last points above that the New York Public Service Commission allowed higher rates for customers with very high usage. Municipal power companies in New York can now charge Bitcoin and other cryptocurrency miners more if their “maximum demand exceeds 300kW or whose load density exceeds 250kWh per square foot per year.” This allows utilities the flexibility to adjust bills to account for higher costs of generation.
As utilities across the U.S., Canada and elsewhere work to cope with cryptocurrency mining, they can rest assured that at least precedent is beginning to turn in their favor. Reaching out to local regulatory bodies can be a strong aid in tackling the problems miners can create, ensuring stability of prices and enabling the generation needed.
Cryptocurrency and other emerging industry challenges are frequent topics of discussion in Chartwell’s Billing and Payment Leadership Council. For more information on the council, please contact me at email@example.com.