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The New York state has announced a higher tariff for cryptocurrency miners in smaller towns, in response to the heavy power load needed for mining operations.

The decision follows a petition from the New York Municipal Power Agency (NYMPA), an association of 36 municipal power authorities, representing customer-owned municipalities buying and distributing low-cost power at no profit.

Electricity costs for high-density load customers will increase beginning March, said the Public Service Commission. Costs for non-high-density load customers will return to their previous levels.

While small towns normally welcome business activities, crypto mining places a heavy burden on the grid.

PSC Chair John Rhodes said in a statement: “We always welcome and encourage companies to build and grow their businesses in New York, however, we must ensure business customers pay an appropriate price for the electricity they use."

According to Rhodes, the lower cost of energy in small town areas is a draw card for miners, and the energy usage is more noticeable in these areas, as opposed to large urban areas where large loads are more common.

Regulators commented that costs are being driven up by the increased demand, in spite of finite amounts of low-cost energy available in small towns.

An example of this can be seen in Plattsburgh, N.Y, where average residential bills climbed $10/ month, due to two crypto miners operating in the area.

In its filing, NYMPA noted a request from a cryptocurrency company for 5 MW of electricity to be added to the Village of Akron.

"If Akron were to comply with the request at existing rates, Akron’s annual average bulk power supply costs would have increased 54% with a direct impact on retail rates," according to regulators.

Regulators will allow municipal utilities 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. The PSC said that is a usage amount "far higher than traditional commercial customers."

"Had the new rates been in place in January, the two crypto currency companies in Plattsburgh would have seen a more than 60 percent increase in their monthly electricity costs," said regulators.