The backbone of any digital currency that operates on the blockchain P2P principle is the mining rigs that make it possible. This is also, as many people constantly fail to realize, the thing that is the physical representation of digital currency. In other works, cryptocurrency mines are the exact energy expenditure that allows cryptocurrency to be something that is not created “out of thin air”.
Today, like always, their importance is paramount and more many in the blockchain domain, they are the key link in the entire system. However, recently, a decision in the state of New York power utility regulators could spell trouble for the crypto miners and their ventures.
The same decision could be really problematic for a range of reasons, while at the same time, it could hamper new development and advances in research. Here is an overview of the NY regulatory decision and why it could be a lose-lose for everyone involved.
The NY Utility Bills Ruling
The New York state utility regulators recently reacted to a petition by the NYMPA (New York Municipal Power Agency) and allowed the same agencies to bill cryptocurrency miners more for their electricity expenses. The move was confirmed by the chair of the New York State Public Service Commission and it will come into effect in March 2018.
There is a set of requirements that the mining companies need to cover so that the power providers can do this. The same are mainly focused on the power load of their ventures and what effect does it have on the rest of the power grid.
The reason for the initial petition was the fact that many communities in the NY did not feel any benefit from the mining companies. These employed few if any of the local contractors and provided little to the economy of the regions where they operated. At the same time, their power expenditures were so high that the entire areas also got a price hike because of them.
It is clear that both the majority of the community and the regulators found this setup open for change. The same change is going to be a higher price tag for electricity for the miners. It can be expected that all local power authorities will take up this offer and really do boost the prices for the same businesses.
The reality is that a lot of different groups have a lot of problems with cryptocurrencies. These stem from ideological ideas about what currency is and why it should be, sometimes it comes from personal or institutional interested, but sadly, most of the time this animosity comes from the sheer ignorance about the entire process.
Bitcoin is a perfect example. While it has been used for almost a decade for everything from online betting to very complex institutional investment in places like Japan, a lot of individuals believe BTC is made by clicking a mouse. The very notion of energy investment into the mining process is a completely foreign idea to the same persons.
The decision to hamper the mining operations is definitely fueled by ignorance and reactions to the most apparent elements of reality. Yes, the price of utility bills was likely raised in the regions with crypto miners. However, the same price increase was probably minuscule and left little real economic damage to the same area.
On the other hand, the price jack is definitely leaving a big impact on the cryptocurrency miners. Their entire operation revolves around having the lowest possible expenditure to make sure that they are viable even in volatile markets that is the digital currency. What is worse for everyone, they will be forced to act or go out of business.
The Quebec Options of the World
The bottom line of moves like the one made by NY is that the miners will simply leave. There is nothing holding them there apart from leased buildings, moving costs and a couple of days of hardware setup. However, what makes this decision even more preposterous is the fact that Quebec recently began its big push to attract crypto miners.
In the region filled with hydroelectric dams, the power price tag is accessible even now, but the deal becomes a lot better thanks to the incentives they are offering. Like with eSports and other digital ventures, mining companies are flexible and adaptive to better offers. In this case, the distance they will need to traverse is both short and the end location easily accessible.
That is why there is no doubt that many of the impacted companies are looking at Quebec and also other options like it all over the globe. Unlike any traditional form of industry, the mining sector of the cryptocurrency market can leave and relocate easily. The same companies might even take the opportunity to update their hardware, meaning that the costs of relocation could end up very affordable.
Lessons for both Parties
In a situation like this, the truth of the matter is that both the regulators and the mining companies made missteps in their relationship. The bigger mistake is being made by the state itself which will lose important potential revenue that would come their way from the general growth of the crypto market industry in their region.
However, it must be said that the crypto miners also made some mistakes mainly by not communicating what they do to the rest of the community. The era of moving into a warehouse and starting to mine has passed and the plain fact is that the community will notice this either way.
Now, it is the responsibility of the companies to find ways how they can spread their message to the local residents and show them the advantages of having them around. This is not something many of them do effectively or often at all, but the first step would be hiring a few local people for their marketing efforts.
This way, they could both show and tell how they are engaging the local business environment. Otherwise, situations like the one in NY could become a regular occurrence across the world.