U.S. miners face yet another blow before Halving as higher rate for cryptocurrency mining facilities in Washington state is upheld

By Selena On Apr 13, 2020

Years ago, when Bitcoin was still new and mostly unknown, crypto mining was not only profitable but also quite easy. Anyone could do it with only their PC, and even the consumption of electricity sat much lower than today. Now, U.S. miners face yet another blow before the halving as a higher rate for cryptocurrency mining facilities in Washington state is upheld.

U.S. cryptocurrency mining to pay higher rates for mining facilities

However, those days are long gone now, as the cost of mining grew with each new miner that came to the sector. Crypto miners from the U.S. will also have to deal with additional issues regarding mining.

According to Law360:

“The district alleged that requests from cryptocurrency miners in 2017 totaled 1,500 megawatts of new load, more than twice the district’s average load of 600 MW.”

The U.S. is far from the crypto-friendliest country, even on its good days. Now, only a month before Bitcoin halving, it just delivered another blow to the mining industry.

The new problem is currently hitting cryptocurrency traders in the U.S. state of Washington. They will have to pay higher rates for cryptocurrency mining facilities in the country.

The origin of the issue came three years ago, in 2017. Back then, the state’s district of Grant County, said that there was a massive influx of power requests during the summer. The claims came from the crypto miners, who used the cheap energy rates of the district.

The requests led to a surge of the load, which grew from its typical 600 MW to 1,500 MW. The district needed to find a way to cope with the increase, while still securing the power for regular users. This is why it added a new class, calling it the Evolving Industries Class.

Moreover:

“The district’s commission has broad discretion to set rates, and the plaintiffs had not demonstrated that they have a legitimate claim of entitlement to a fair and nondiscriminatory rate under Washington law.”

Complaint by miners dismissed by Federal Court

The new class includes risky industries, especially when it comes to regulatory changes. It also consists of those with business operations sustainability risks, as well as those that rely on large amounts of power. Any industry that uses over 5% of the district’s total load would see evaluation.

When it comes to crypto mining, it pretty much sees risks on all fronts. The surges in demand require the district to produce more power, but if the demand drops, the district will remain without customers.

As a result, Evolving Industries will now have to pay increased rates, which includes crypto miners. Of course, miners attempted to complain against the decision. They filed a complaint on December 19th, 2018. They also claimed that the demand has dropped since 2017 and that the estimates made back then are no longer realistic.

They also claimed that the district’s move violates the commerce clause of the US Constitution. The new class offers a discriminatory rate schedule that is damaging the mining industry. However, the Washington state federal court recently addressed the claims, opting to dismiss the complaint.

Just two days after the Bitcoin Cash halving, mining it was no longer profitable as miners capitulated to mine Bitcoin instead:

Bitcoin Cash hashrate capitulation.

After the halving on April 8th, it’s no longer profitable to mine BCH causing many miners to switch over to BTC. pic.twitter.com/vISDMX5l7z

— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) April 13, 2020

With a month to go before the Bitcoin Halving, many mining facilities may be squeezed out of the game at least temporarily. Those with modern hardware rigs and access to cheap power will survive.

U.S. miners competing against their Chinese counterparts will find the high energy rate an additional blow. As blockchain technology in the energy sector looks set to grow, this triumph by the Washington district in court may set a precedent for other states in the U.S., making crypto mining even harder for companies in this country.

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