Crypto miners have been handed a new lease of life in upstate New York in the form of reduced electricity rates. As you may already be aware, upstate New York is full of hydro-electric dams, with these dams creating very cheap electricity. However, local residents are starting to worry that with more crypto mining firms moving to the area, the price of electricity will go up. US government officials have said that they are still exploring ways to balance attracting new businesses to the area and keeping residents power bills from spiraling out of control. In a new statement John Rhodes – New York State Department of Public Service Chair – said, “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.”
Miners Can Negotiate Their Own Contracts
The US government has approved a new rate structure for the municipality of Massena, giving it the ability to deal directly with miners. In this move, miners will now be able to negotiate their electricity contracts directly with the municipal utility board, potentially getting a better rate per kilowatt-hour than elsewhere in the state. This will give the municipal utility the ability to control and limit the cheap power, so as not to affect local residents negatively. Miners will be considered on a case by case and supply/demand basis.
Cheapest Rates In the USA
Upstate New York is well known for its abundance of hydroelectric power thanks to its 23 dams. This has helped to create some of the cheapest residential electricity rates in the entire country. In Massena, the average rate per kilowatt-hour is a mere $0.039 (about 630 Satoshis). Elsewhere in the US, the average rate per kilowatt-hour is roughly $0.13 (about 2,200 Satoshis). It is this cheap rate that has been attracting miners to the area, forcing the local government to instill new measures so they can charge miners their own special rate.
The Power of Low-Cost Electricity
In Venezuela the cost of electricity is even cheaper, meaning crypto mining has become extremely popular, especially given the country’s hyperinflation and worthless Bolivar. The hyperinflated economy has made electricity so cheap, mining is nearly always profitable. With Bitcoin being in a long-term bear trend, the value of Bitcoin is putting many miners off joining the mining market, meaning the price of electricity is critical for miners so they can turn a profit.
Independent Mining Is A Good Thing
There are many in the crypto world who believe the mining process is controlled by a few, and for the most part that remains true. Bitmain is slowly edging closer and closer to controlling 51% of the network hash rate, and while it has reduced its majority power output, it has acquired a new pool – viaBTC. Bitmain has vehemently denied having any control over this pool, but some believe that simply owning this pool infers that Bitmain is seeking to control the majority Bitcoin network hash rate. A Bitcoin Core developer has launched a new mining protocol that aims to give more power to miners, taking control away from super-pools in the process. This new protocol combined with cheaper electricity rates should help with creating a truly decentralized mining process.
Bringing Onboard More Miners
If the Bitcoin network can continue to bring onboard more miners through cheaper equipment and electricity, there could be a change in dynamic. We could start seeing a shift from large corporate owned pools controlling the network hash rate towards individual miners and decentralized mining pools. This shift will be good for the Bitcoin network, especially when you consider large mining farms are at risk from natural disasters. Decentralized mining will help to keep the Bitcoin network hash rate at levels that support the growing adoption of Bitcoin as a means of payment.