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posted by martyb on Sunday March 18 2018, @09:17PM   Printer-friendly
from the power-struggle dept.

On Wednesday, the New York State Public Service Commission (PSC) ruled that municipal power companies could charge higher electricity rates to cryptocurrency miners who try to benefit from the state's abundance of cheap hydroelectric power.

Over the years, Bitcoin's soaring price has drawn entrepreneurs to mining. Bitcoin mining enterprises have become massive endeavors, consuming megawatts of power on some grids. To minimize the cost of that considerable power draw, mining companies have tried to site their operations in towns with cheap electricity, both in the US and around the world. In the US, regions with the cheapest energy tend to be small towns with hydroelectric power. (Politico recently wrote extensively about the Bitcoin mining boom in Washington state's mid-Columbia valley, a hotspot for cheap hydro.)

But mining booms in small US towns are not always met with approval. A group of 36 municipal power authorities in northern and western New York petitioned the PSC for permission to raise electricity rates for cryptocurrency miners because their excessive power use has been taxing very small local grids and causing rates to rise for other customers.

[...] Ultimately, the PSC decided that municipal power authorities will be allowed to increase rates for customers whose maximum demand exceeds 300kW or whose load density "exceeds 250kWh per square foot per year."

Singling out a power-hungry industry for rate increases isn't without precedent. In Boulder County, Colorado, for example, marijuana growers are charged an extra $0.0216 per kWh because they use so much power to run grow lights, ventilation systems, and air conditioners for their plants.

Source: Ars Technica


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  • (Score: 4, Interesting) by sjames on Sunday March 18 2018, @10:09PM (26 children)

    by sjames (2882) on Sunday March 18 2018, @10:09PM (#654599) Journal

    Those towns are trying to encourage employers to move in by keeping power costs low. But bitcoin miners don't tend to employ many people, so they were just riding in on the coattails.

    And no, the power company doesn't get to audit what you do with the power, the law uses power density as it's metric.

    It's not at all uncommon when expansion would be very costly or infeasible to charge more to heavy users of a resource, or atlernatively charge less for people who limit their use as a reward.

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  • (Score: 2, Insightful) by khallow on Monday March 19 2018, @04:29AM (25 children)

    by khallow (3766) Subscriber Badge on Monday March 19 2018, @04:29AM (#654696) Journal

    Those towns are trying to encourage employers to move in by keeping power costs low. But bitcoin miners don't tend to employ many people, so they were just riding in on the coattails.

    Poor ideas result in poor outcomes. What businesses are going to decide to move in just because of low electricity prices? It's only electricity-intensive businesses like cryptocurrency or aluminum smelters miners that would be attracted in the first place. And it's not fair to say that they were "riding in on the coattails" when they were the businesses that would be attracted by low electricity prices.

    And no, the power company doesn't get to audit what you do with the power, the law uses power density as it's metric.

    Which let us note is an easy metric to game. At that point, what's next? It's typical regulatory thrashing after creation of an easily exploitable public good (the electricity subsidy) in feeble attempts to deal with the resulting tragedy of the commons.

    It's not at all uncommon when expansion would be very costly or infeasible to charge more to heavy users of a resource, or atlernatively charge less for people who limit their use as a reward.

    Or the electricity company can just buy huge amounts off the grid, which wouldn't be a problem, if they were charging market rates for their electricity.

    • (Score: 2) by sjames on Monday March 19 2018, @06:02AM (22 children)

      by sjames (2882) on Monday March 19 2018, @06:02AM (#654718) Journal

      You do realize that different sources of electricity cost different amounts, right? That's why so many companies try to shave peaks through various surcharges and discounts. So big fat surprise, as long as demand can be met by a local hydro plant, the cost of electricity is low, but if they're forced to fire up a gas turbine plant, it costs more.

      And no, power density is not easy to game. You have X property and Y power consumption. You MAY be able to buy/lease adjacent land, but then you have a significant extra expense including property taxes.

      • (Score: 1) by khallow on Monday March 19 2018, @08:34AM (21 children)

        by khallow (3766) Subscriber Badge on Monday March 19 2018, @08:34AM (#654757) Journal

        You do realize that different sources of electricity cost different amounts, right?

        Not relevant here. Floating prices based on overall demand is very different from selectively billing "high density" users extra.

        And no, power density is not easy to game. You have X property and Y power consumption.

        Or that's 10X property (either obtained by throwing up cheap real estate or adding a bunch of relatively cheap farmland). Which would then allow you to do 10Y power consumption. More likely, they'll just buy power or rent space with other qualifying businesses in the area. If all your local restaurants have bitcoin mining operations in the basement, what exactly are the utilities going to do about it?

        But what's really silly about the whole thing is that the miners are useful to have around since they have really predictable, smooth demand. You just don't want them drawing power at peak load. The whole thing would be solved with tiered power where power is cheap at off times (like 2am) and expensive at 5pm. Smart meter the whole operation and don't lose sleep over it.

        They're lucky here that the cryptocurrency miners aren't politically influential. Else that Commission might well be a tool for the miners rather than for the utilities.

        • (Score: 2) by sjames on Monday March 19 2018, @05:19PM (20 children)

          by sjames (2882) on Monday March 19 2018, @05:19PM (#655009) Journal

          If they are renting from every business in town, they will be injecting money into the local economy, objective achieved!

          • (Score: 1) by khallow on Monday March 19 2018, @05:51PM (19 children)

            by khallow (3766) Subscriber Badge on Monday March 19 2018, @05:51PM (#655031) Journal
            Except of course, the grid will still be "stressed" and the municipality will come up with a new way to screw things up.
            • (Score: 2) by sjames on Monday March 19 2018, @10:27PM (18 children)

              by sjames (2882) on Monday March 19 2018, @10:27PM (#655157) Journal

              Care to support that bald assumption?

              • (Score: 1) by khallow on Monday March 19 2018, @11:38PM (17 children)

                by khallow (3766) Subscriber Badge on Monday March 19 2018, @11:38PM (#655189) Journal

                Except of course, the grid will still be "stressed" and the municipality will come up with a new way to screw things up.

                Care to support that bald assumption?

                Because they're already doing that. We started with creation of a public good, electricity subsidies for businesses, followed up with ham-handed rate increases for specific usage cases (high consumption density) because people aren't using the public good like expected. But if they hadn't done this in the first place, then they wouldn't have the problems.

                What's particularly stupid about the whole thing is that their neighbors have already solved this. Pennsylvania and Ontario both have schemes that would keep cryptocurrency mining from becoming a problem.

                • (Score: 2) by sjames on Tuesday March 20 2018, @02:44AM (16 children)

                  by sjames (2882) on Tuesday March 20 2018, @02:44AM (#655240) Journal

                  So you propose that due to a subspace rupture, future and present are one there so that they are already doing something you predict they will do and you predict they will eventually do it because they are doing it right now in the future?

                  • (Score: 1) by khallow on Tuesday March 20 2018, @05:01PM (15 children)

                    by khallow (3766) Subscriber Badge on Tuesday March 20 2018, @05:01PM (#655486) Journal
                    No, I'm predicting that they'll continue to try to preserve the subsidy/public good with more intrusive fixes after the weaker fixes don't work as expected. This is a typical outcome.
                    • (Score: 2) by sjames on Wednesday March 21 2018, @01:24AM (14 children)

                      by sjames (2882) on Wednesday March 21 2018, @01:24AM (#655780) Journal

                      Then you're assuming they will choose the worst possible approach and beating the rush by condemning them for it now.

                      Of course, that is predicated on the current plan actually failing. No evidence is offered that it will fail. It's a whole straw army!

                      • (Score: 1) by khallow on Wednesday March 21 2018, @06:46AM (13 children)

                        by khallow (3766) Subscriber Badge on Wednesday March 21 2018, @06:46AM (#655947) Journal
                        The worst case is a typical outcome. Keep in mind that they didn't veer off the path to failure and there is a considerable incentive for the miners to continue to consume cheap electricity.

                        Of course, that is predicated on the current plan actually failing.

                        After you've seen these games played out repeatedly, it's not that hard to see failure coming.

                        • (Score: 2) by sjames on Wednesday March 21 2018, @09:23AM (12 children)

                          by sjames (2882) on Wednesday March 21 2018, @09:23AM (#655998) Journal

                          Sorry, you don't get to claim your crystal ball gazing as if it was fact. Tiered power billing is quite common across the U.S. Keep in mind, I can fairly say I have never seen a free market economy that didn't eventually implode. If you object claiming some economy or another hasn't imploded, I'll just add yet and declare victory.

                          Meanwhile, NY has made it clear that they don't intend to offer cheap power to bitcoin miners. They'll take the path of least resistance and find somewhere else.

                          Or they'll rent from all of the local businesses and support the local economy that way.

                          • (Score: 1) by khallow on Wednesday March 21 2018, @11:07AM (11 children)

                            by khallow (3766) Subscriber Badge on Wednesday March 21 2018, @11:07AM (#656034) Journal

                            Tiered power billing is quite common across the U.S.

                            Not in New York where this problem is occurring. Not only did the problem come because of lack of tiered billing, it's being made worse because the sort of tiered billing being employed is based on a terrible approach. As I noted earlier, failure is ongoing.

                            • (Score: 2) by sjames on Wednesday March 21 2018, @11:26AM (10 children)

                              by sjames (2882) on Wednesday March 21 2018, @11:26AM (#656042) Journal

                              So they lacked tiered pricing and that was a problem, so they implemented it and that is a problem? Make up your mind! And back it up with something other than your bald opinion.

                              And tell me, what is your suggestion for tiered pricing that will work so much better?

                              • (Score: 1) by khallow on Wednesday March 21 2018, @05:30PM (9 children)

                                by khallow (3766) Subscriber Badge on Wednesday March 21 2018, @05:30PM (#656225) Journal
                                The problem is that the tiered pricing is not based on the actual cost of providing the electricity. As a result, they're attempting to drive out the miners when they should just be encouraging them to mine during off hours. It's failure whether or not the scheme works. Either it works and they just pushed out part of the economy that they were trying to create, or it fails, and they're still overloaded at the times they don't want to be. I'm betting on the latter.
                                • (Score: 2) by sjames on Wednesday March 21 2018, @06:37PM (8 children)

                                  by sjames (2882) on Wednesday March 21 2018, @06:37PM (#656276) Journal

                                  Except that it is. By pushing demand beyond what the cheap hydro can supply, the miners forced the local co-ops to resort to more expensive power from elsewhere.

                                  That was clearly indicated in TFA.

                                  • (Score: 1) by khallow on Wednesday March 21 2018, @09:07PM (7 children)

                                    by khallow (3766) Subscriber Badge on Wednesday March 21 2018, @09:07PM (#656340) Journal

                                    By pushing demand beyond what the cheap hydro can supply, the miners forced the local co-ops to resort to more expensive power from elsewhere.

                                    I never said that utilities had to stick with a bad pricing model. What I've repeatedly opposed is ham-handed, punitive pricing merely because a subsidy got exploited in an unexpected way. This started off on the wrong foot and there's no indication that the utilities and regulator will stop meddling until the exploitation loophole goes away completely.

                                    • (Score: 2) by sjames on Wednesday March 21 2018, @11:32PM (6 children)

                                      by sjames (2882) on Wednesday March 21 2018, @11:32PM (#656386) Journal

                                      And closing the loophole is bad why?

                                      • (Score: 1) by khallow on Thursday March 22 2018, @12:08AM (5 children)

                                        by khallow (3766) Subscriber Badge on Thursday March 22 2018, @12:08AM (#656397) Journal
                                        Because they're going about it Rube Goldberg-style with layers of bureaucracy and rules when a simple tiered (by overall demand, time of day, season, etc), demand-agnostic pricing model would have sufficed at the start. This is going to bite other electricity-intensive businesses years or possibly decades down the road who had nothing to do with the present problems.
                                        • (Score: 2) by sjames on Thursday March 22 2018, @12:34AM (4 children)

                                          by sjames (2882) on Thursday March 22 2018, @12:34AM (#656401) Journal

                                          So you claim that a continuously variable rate based on overall demand, time of day, and season for everyone is LESS complicated than a simple power density surcharge where those who will have to pay it already know who they are?

                                          You have an odd definition of complicated.

                                          • (Score: 1) by khallow on Thursday March 22 2018, @01:06AM (3 children)

                                            by khallow (3766) Subscriber Badge on Thursday March 22 2018, @01:06AM (#656412) Journal

                                            So you claim that a continuously variable rate based on overall demand, time of day, and season for everyone is LESS complicated than a simple power density surcharge where those who will have to pay it already know who they are?

                                            Yes. It's called a market for which pricing information already generates what you want to find out. And it doesn't come with the silly tragedy of commons problems associated with the artificially low prices of the current approach. Once again, keep in mind that the current "simple" power density surcharge is just a first move. Perhaps miners will move on, passing on that cheap electricity. In which case, this rule change becomes a permanent obstacle years or decades from now for a threat that has moved on. I think it more likely that they won't give up on the free money because of some silly rule. In which case, the infrastructure stress will still be present. At that point, it'll be more rules and perhaps more working around those rules.

                                            So what is more complex? Doing it right the first time? Or creating permanent problems and obstructions decades from now because miners were a problem way back in 2018.

                                            • (Score: 2) by sjames on Thursday March 22 2018, @03:26AM (2 children)

                                              by sjames (2882) on Thursday March 22 2018, @03:26AM (#656465) Journal

                                              Wow. You ACTUALLY think that it's simpler that even if you know to the watt-hour how much power you will use, you can't tell what your bill will be? And that it's simpler to use a scheme that requires all new meters that not only measure the total power used in a time period, but record exactly when you use it?

                                              The funny part is that your proposed "solution" doesn't even meet the objective of making the miners bear the entire extra cost of providing them such large amounts of power. Even funnier, you don't seem to understand that it's still the market at work. The miners are free to either pay the new price (presuming they remain profitable) and stay or move to where prices are more favorable to them. It's far closer to a market solution than other places that simply ban commercial bitcoin mining.

                                              There is no magic market faery. Markets must be regulated and managed or things go to hell fairly quickly.

                                              • (Score: 1) by khallow on Thursday March 22 2018, @05:43AM (1 child)

                                                by khallow (3766) Subscriber Badge on Thursday March 22 2018, @05:43AM (#656491) Journal

                                                The funny part is that your proposed "solution" doesn't even meet the objective of making the miners bear the entire extra cost of providing them such large amounts of power.

                                                What extra cost? Let us keep in mind that a key part of the problem is that the utility was deliberately providing under cost power in the first place. Thus, the key party that should be bearing the cost of the scheme, the utility, is already bearing the cost of the scheme.

                                                Wow. You ACTUALLY think that it's simpler that even if you know to the watt-hour how much power you will use, you can't tell what your bill will be? And that it's simpler to use a scheme that requires all new meters that not only measure the total power used in a time period, but record exactly when you use it?

                                                [...]

                                                There is no magic market faery. Markets must be regulated and managed or things go to hell fairly quickly.

                                                Yet it's a solved problem. Find out how they solved it, smart metering or whatever. And just do that.

                                                • (Score: 2) by sjames on Thursday March 22 2018, @04:41PM

                                                  by sjames (2882) on Thursday March 22 2018, @04:41PM (#656674) Journal

                                                  The extra cost of buying from the grid rather than relying solely on lower cost hydro for power. It's right there in TFA, they were NOT providing power below cost, they were just able to fulfill demand with lower cost local hydro. That has been pointed out several times, but you keep forgetting it because it provides a reasonable explanation for their current surcharge strategy and eviscerates your complaints.

                                                  They solved the problem by having surcharges for heavy power users that stress the local grid..

    • (Score: 0) by Anonymous Coward on Monday March 19 2018, @09:06AM (1 child)

      by Anonymous Coward on Monday March 19 2018, @09:06AM (#654763)

      Which let us note is an easy metric to game. At that point, what's next?

      The problem is not power, but transmission infrastructure. Power companies don't want to build-up their power infrastructure just because some idiot taxes the grid in one place because of magical numbers. You know, the grid is setup for average utilization. Your connection is oversubscribed, just like Internet. Not everyone can use max load at all times.

      If you want to mine off-grid with your solar panels, gods speed, gods speed.

      • (Score: 1) by khallow on Monday March 19 2018, @09:27AM

        by khallow (3766) Subscriber Badge on Monday March 19 2018, @09:27AM (#654766) Journal

        You know, the grid is setup for average utilization.

        The grid is set up to handle peak load, not average load. For off-peak times, there's no issue with cryptocurrency mining. Just charge extra to all consumers during peak time and the problem will be nipped in the bud.