Fitch Ratings warns of risks crypto miners pose to US power supply

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Global credit rating agency Fitch Ratings warns public power services across the U.S. to mitigate the risk cryptocurrency could post their power output.

On Monday notice, Fitch Ratings said that only utilities in states like Washington that have excessive generation capacity may be able to meet the powerful demands of many crypto mining operations. The agency said that although some crypto mining companies may become “the largest customer in rural service territory”, the operations usually bring “very little additional economic benefits” from jobs or a boost to the local economy.

“The volatile and unregulated nature of crypto mining and the large influx of cargo demands have led some Washington utilities to adopt new practices beginning in 2014 to mitigate exposure to cryptocurrencies. and defined customer concentration limits, ”said Fitch Ratings.

In Texas, where many mining operations have set up shop after leaving companies in China, Fitch Ratings has suggested that utility companies invest in new facilities, sign long-term power purchase agreements or gain power through real-time market purchases to handle the additional ones. load. However, each option carries a financial risk that can later be passed on to residents:

“Crypto mining operations are price-sensitive creatures that can be quickly scaled down or shut down if mining becomes uneconomical.”

Many crypto mining companies are looking for the most cost-effective area for token mining, with some U.S. states including Texas and Washington offering more favorable terms than others. Canadian mining company Bitfarms announced in November that it was planning to build a data center in Washington State, citing its “cost-effective electricity” and production courses. Whinstone, later acquired by Riot Blockchain, set up shop in Texas, taking advantage of the state’s wind turbines and deregulated power grid.

Related: Texan Bitcoin mining power requirements could jump 5 times by 2023

Fitch Ratings has previously issued warnings related to the use of cryptocurrencies such as Bitcoin (BTC) in local economies. In August, shortly before El Salvador enacted its Bitcoin Act by making the crypto asset a legal tender, the agency warned of the volatility and operational risks for citizens using crypto, adding that local insurance companies would likely be reluctant to adopt BTC for claims or profit payments.