Local power company raises rates for customers for a surprising reason — and it has to do with bitcoin

The cryptocurrency industry has the ability to help lower energy prices, and the shutdown of one mine shows just how that relationship works.

What's happening?

The closing of a bitcoin mining operation in the Stokmarknes area of Norway caused a utility to raise rates for individual customers, according to reports, including one by Cryptopolitan.

The energy company Noranett said user bills could rise by 3,000 kroner (about $265) per year after it lost 20% of its revenue when the municipality of Hadsel declined to renew Kryptovault's three-year-old temporary permit because of noise pollution.

Some local residents had been trying to shut down the facility for several years, per the Norwegian Broadcasting Corporation (NRK) in translation. It used about 80 gigawatt-hours of electricity annually.

Why is this important?

Archway.Finance noted that cryptomining facilities claim to create jobs and increase tax revenues but employ few people; their economic benefits are outweighed by high energy demand and, often, carbon pollution from dirty fuel-based electricity (depending on the local utility's sources) in addition to higher prices for consumers. 

It's unclear what exact mix of energy sources generates electricity for Hadsel, though Norway is strongly oriented toward renewable energy. 

In this case, Kryptovault was using already-produced leftover power, something crypto advocates point to as a way the industry's power usage — which is nonetheless still a major problem in many areas — can often be put into better context than the sheer energy usage in a vacuum. The noise pollution was caused by cooling fans needed to keep equipment from overheating, NRK reported.

"Mining facilities can utilize this excess energy, stabilizing the grid by acting as a variable load," The Block stated. "This helps to absorb surplus electricity during periods of low demand, ultimately reducing energy waste and lowering costs for other consumers."

But not all areas have a consistent surplus of power, and thus cryptomining energy demands can raise rates for households or cause more pollution to get the power they need, too. Texans' electric bills, for example, climbed 5%, or by $1.8 billion annually, according to one report cited by the New York Times.

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In the United States, the average homeowner by 2030 could pay over $1,000 more for electricity every year because of the demand of cryptomining and artificial intelligence data centers, the Houston Chronicle reported. In North Texas, a lawsuit alleges noise pollution from a crypto mine caused permanent hearing loss and other problems for residents.

Mayor Kjell-Børge Freiberg said Hadsel will look for other projects to use the excess energy, per The Block.

What's being done about crypto mining's drawbacks?

Kryptovault may have improved its noise-reducing measures by enlarging noise barriers and installing sound-absorbing material, but residents were unsatisfied.

Other solutions include moving to proof-of-stake mining and other methods from proof-of-work, although this is unrealistic for bitcoin itself. And miners can use renewable energy sources such as solar and wind power, which Archway.Finance said "could even be economically advantageous for them."

Otherwise, policies, including carbon taxes and transaction fees, may rein in the industry.

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