Low Power Prices for Crypto Miners Come With Strings Attached

Low Power Prices for Crypto Miners Come With Strings Attached
Power units at a cryptocurrency mining farm (Shutterstock)

Low power prices and relatively low land prices were two factors that attracted cryptocurrency miners to Arkansas, they say, and Entergy Arkansas has been the utility hooking them up.

Entergy is offering a special tariff for the companies, and spokesperson Brandi Hinkle offered more details last week.

The energy charge is quite low, about three-quarters of a penny to a little over a penny per kilowatt-hour, but that is just part of the rate. Demand charges typically make up a third or more of commercial power bills, and customers also pay riders for energy cost recovery, energy efficiency, etc., Hinkle said.

“Each customer’s monthly bill will vary based upon their actual demand, kWh consumption, load factor and other optional services,” she said.

Hinkle also said Entergy will determine which companies are eligible for the tariff, counting off several common characteristics.

The companies will require heavy power loads and density per square foot of operations, and could have highly variable peaks and valleys in load demand. They are also notably sensitive to volatile factors like the price of bitcoin, being “part of a new and growing industry,” and sometimes have little credit history.

Because some of those characteristics also apply to data centers, which don’t carry as much inherent risk as digital currency mining, “the tariff includes language giving Entergy Arkansas the flexibility to objectively evaluate whether a particular customer is engaged in crypto mining,” Hinkle said. Entergy will require a three-month deposit from miners, along with a surety bond or irrevocable letter of credit.

Hinkle said Entergy is pleased to offer good rates to the new enterprises. But the investor-owned utility’s “competitive rates and terms of service” come with a responsibility to mitigate “risks to other customers that are characteristic of crypto mining operations.”

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