Crypto miners pose a threat to the US power supply, says Fitch Ratings

Fitch Ratings, a global credit rating firm, has given a notice to public power utilities across the United States, stating that crypto mining poses a risk to their power production.

Only utilities in areas like Washington, which have excess generation capacity, may be able to cover the power requirements of many crypto mining operations, according to a Monday warning from Fitch Ratings. Although some crypto mining companies can become “the largest customer in a rural service territory,” the agency claims that the operations often generate relatively few additional economic advantages in terms of jobs or economic growth in the area.

Recently, several countries have restricted their power supply, including the Iranian Power Authority, which cut energy supply to license crypto miners in the region. 

Many cryptocurrency mining firms are looking for the most cost-effective location to mine tokens, with some states in the United States, such as Texas and Washington, offering more advantageous conditions than others. Bitfarms, a Canadian mining company, stated in November that it would develop a data center in Washington State, citing the state’s “cost-effective electricity” and high production rates as reasons. Whinstone, which was eventually acquired by Riot Blockchain, established itself in Texas, utilizing the state’s wind turbines and deregulated power grid.

Fitch Ratings suggests multiple alternatives

“The volatile and unregulated nature of crypto mining, as well as the large influx of load requests,” according to Fitch Ratings, “led a number of Washington utilities to adopt new practices to mitigate exposure to crypto mining entities beginning in 2014, including crypto-currency load moratoriums, evolving rate structures to capture the departure risk of a high-risk industry, and defined customer concentration limits.”

To accommodate the added demand, Fitch Ratings proposed utility companies invest in new facilities, establish long-term power purchase agreements, or buy electricity through market purchases in real-time in Texas, where many mining operations have set up shop following a migration of firms from China. Each alternative, however, entails a financial risk that may be passed on to residents:

“Crypto mining operations are price-sensitive entities that may be quickly scaled back or shut down if mining becomes uneconomical.” As TheCoinRise reported, Iceland rejected the power requests from new Bitcoin miners.