New York State Now Wants to Levy a Tax on Bitcoin Mining
New York regulators want to levy a tax on high-load cryptocurrency mining operations which use large amounts of power and drive up prices for other customers.
John B. Rhodes, the chairman of New York State Public Service Commission, confirmed that starting from March, higher electricity use for cryptocurrency mining businesses will be charged.
“Commission will allow municipal power authorities to create a new tariff focusing on high-density load 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 per year, a usage amount far higher than traditional commercial customers,” the ruling states.
This decision comes at a time when disputes over cryptocurrency mining farms in New York State have already been seen in public debates and results from a petition filed by the New York Municipal Power Agency (NYMPA), an association of 36 municipal power authorities which represents customer-owned munis buying and distributing low-cost power, often hydroelectric, at no profit.
Accroding to NYMPA, in some cases mining operations take up over a third of the municipal power demand. While some mining firms make up for 33 percent of the municipal utility load, they “have few associated jobs, and make little to no capital investment in the local community.”
Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. This process is energy-intensive and often causes power consumption issues.
There are also concerns that crypto mining businesses would increase the utility bills of local residents while not bringing enough economic value in return.
“If we hadn’t acted, existing residential and commercial customers in upstate communities served by a municipal power authority would see sharp increases in their utility bills,” John B. Rhodes commented.
In Plattsburgh, New York, the city council unanimously voted to impose an 18-month moratorium on Bitcoin mining. Plattsburgh has cheap due to a hydroelectric dam on the St. Lawrence river, and residents pay only 4.5 cents per kilowatt-hour.
The city only has an allotment of 104 megawatt-hours of electricity per month. After the biggest Bitcoin mining operation in Plattsburgh by Coinmint used roughly 10 percent of the city’s total power budget in January and February, residents began reporting wildly inflated electricity bills.
By the way, New York is a state where ICO is outlawed. New York passed the BitLicense regulation that at the time made all existing exchanges illegal and set up a dense process to register an exchange to do business in the state.
Regulation of Bitcoin mining is considered in other countries as well. China which wanted to impose restrictions on the electricity usage by miners. Canadian electric utility Hydro-Quebec also may raise energy rates for crypto businesses.
Iceland, where power experts believed that this year the country would use more energy for mining cryptocurrencies than powering homes, faced another problem. Over 600 powerful mining computers were stolen from the data centers.
Regulation of Bitcoin mining is understandable, as any government seeks to protect its residents.
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