Tech

Cecille de Jesus

New York wants cryptocurrency miners to pay premium rates for electricity

New York doesn’t seem to be getting along with cryptocurrency companies until now.

The New York Power Authority has slapped cryptocurrency miners with a decision stating that such activities will now be charged premium rates for electricity. The move would protect other electricity consumers from fluctuations in electricity costs, which is a likely possibility should cryptocurrency miners set up shop in the city and consume huge amounts of power, spiking up demand for energy supply and with it, kilowatt hour prices.

“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,” commission chair John Rhodes said.

This is additional bad news, especially for companies who have just finally reconciled with the fact that they have to acquire a Bitlicense to operate in New York. One company in many people’s minds is CoinMint, which only recently was able to secure the approval of lawmakers to set up a cryptocurrency mining farm in a decommissioned smelter in the town of Massena after promising 150 jobs to residents of the state. It’s now in question what their next move will be given the new decision, which will make their original plan more expensive and therefore less profitable.

In June 2015, the New York Department of Financial Services (DFS) handed down the Bitlicense regulation, which requires that anyone—companies or individuals—engaging in cryptocurrency-related activities such as mining would have to apply for the license. But instead of compliance, this forced companies like Bitfinex and Shapeshift out of the state, with more protesting and saying that the heavy-handed regulation has created circumstances that may force them out as well. Companies argue that the requirements are quite costly, and that the standards were much higher than those imposed on traditional financial institutions.

“We don’t transmit or exchange real digital currencies for our customers,” he remarked. “Kadena is a tech startup company. We’re not a financial institution. We don’t do [anything with money]. Because of the BitLicense, we might leave New York,” says Will Martino, a co-founder of distributed ledger startup Kadena.

Last month, lawmakers said they were open to revisiting the regulation, after it has become apparent that businesses do not support it, with very few applying for the license to date.

“We want to put that out there, circulate it and really figure out how we can make this license in New York state something that works for the residents of New York state and the state economy,” State Senator David Carlucci told CoinDesk. “We’re going to do this again in a month, month and a half from now,” Hamilton said.

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