The profitability of cryptocurrency mining hinges on several key factors. Access to affordable electricity is one of the main requirements. In Washington State, the influx of mining firms has triggered an unpopular side effect. Looming power price hikes may end the Bitcoin gold rush in this part of the US fairly soon.
Power Price Hikes are Coming
Various companies currently mine Bitcoin in Central Washington – particularly Chelan and Grant counties. Both regions are known for their extremely low electricity prices and access to renewable energy. This makes for a perfect cocktail for companies venturing into the world of cryptocurrency mining. Affordable electricity prices will usually result in a more profitable mining operation.
Unfortunately, the influx of such companies can result in major changes. Bitcoin mining operations gobble up high amounts of electricity. This can cause concerns and a strain on the power grid in a specific region. As such, the local public utility districts want to balance the power load moving forward. Their proposed solution comes in the form of major power price hikes for Bitcoin mining operators. It is not a popular decision, but it makes a lot of sense – at least on paper.
These price hikes will not just affect big companies – anyone mining cryptocurrency at home will suffer the same effects. Some residents have threatened to leave the region if this price increase is enforced in the future. It will also curb the interest from other Bitcoin mining firms looking to set up shop in either of those counties, which is not a favorable outcome for local economies.
Shunning Bitcoin Miners Becomes A Trend
Under the current guidelines, Chelan County will double the cost of electricity for cryptocurrency miners. For at-home miners, that would mean a price increase to $0.085 per kilowatt hour. Industrial operators will pay $0.06 per kilowatt hour. It is expected that these changes will go into effect come April 1, 2019. Despite what the date might suggest, this does not appear to be an April Fool’s joke. It remains unclear how miners will respond to this change when push comes to shove.
It is not the first time public utility districts have introduced electricity price hikes for Bitcoin miners. Similar increases have taken place in Canada, where Hydro-Quebec is allowed to charge miners twice the regular electricity price moving forward. This unpopular decision was put in place several months ago. It seems very few companies have left the region because of this change as of right now. As long as companies turn a profit, there is no reason to look at other options.
The long-term effects of these price increases remain unclear. This decision should not cause any major disruption until the rates go into effect in April. At the same time, there may be some companies looking to move their operation to a different location. Access to cheap electricity is increasingly difficult to come by in this day and age. This is despite Bitcoin mining posing far less of a “threat” compared to mining gold.
Do you think cryptocurrency mining operations will look for more competitive electricity prices elsewhere or will they stay put for now? Let us know in the comments below.
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