In a town where electricity comes cheap, and electricity flows quickly, cryptocurrency miners have flocked to its source off the St. Lawrence River, taking full advantage of its currents, depleting the town of almost 10% of its electricity.
Did you know mining for cryptocurrency requires a butt-load of electricity? In a small town like Plattsburgh, New York, it doesn’t have to worry about paying absurd prices for its electricity or going into the open market to purchase more of it. Until now.
On Thursday, the small town of Plattsburgh, New York got shocked from a voltage of its own by its city council, putting a halt to any commercial cryptocurrency mining for the next 18 months. The small town gets approximately 104 megawatt-hours of power, each month. If it exceeds its allotment, the city then must resort to purchasing electricity on the open market, at a significant premium.
Why Cut The Volts On Mining?
Data mining is a process by which individuals or businesses get paid in cryptocurrency to run mathematical equations on high-powered computers, in order to verify the validity of transactions. The computer that solves the equation, gets the newly mined coin. The problem is that it takes a butt-load of electricity to be a miner, and those who are successful at it, use a large network of ‘mining rigs’. To avoid incurring high costs, miners will flock to smaller towns and cities with cheap power and go crazy.
“Plattsburgh offers the cheapest electricity in the world, thanks to its close proximity to the hydroelectric dam,” said Plattsburgh Mayor Colin Read. The St. Lawrence River provides electricity at extremely low costs for residents. While the national average for electricity runs at just over 10 cents per kilowatt-hour (kwh), Plattsburgh rests comfortably at a 4.5 cents/kwh.
It wasn’t until crypto-miners came to town, did the status quo change. Flocking towards a price of 2 cents/kwh, offered to industrial operations, miners took advantage of the cost-savings and used way more than the city thought possible.
For example, the city’s largest mining operation, Coinmint, used almost ten (10) percent of the city’s power in January and February. As a result, the average town bills for electricity rose as high as $200. Outrageous.
If Miners Violate The Law, They Get Shocked With $1,000 Per Day
In response, local lawmakers have enacted the 18-month moratorium, in attempts to work with mining operations to come up with a permanent solution that both benefits the city and miners, without depleting the city or its residents of electricity. Any mining company that violates the law, may be fined up to $1,000 for each day they violate it.
But, miners are more than willing to pay for electricity overages, especially in the colder months. “It would never cost the [Plattsburgh] citizens any more money to let more miners come in, because [they] are willing to pay for those overages,” said Tom Pillsworth, a local citizen and partner at the second largest Bitcoin mine in the city.
The moratorium will allow the city to work with mining companies to figure out how to move forward in a mutually beneficial manner.
There’s A Split In Authority On Whether ‘Mining’ Provides Economic Benefits
The Public Service Commission (“PSC”) gave authorities in upstate New York, the authority to impose tariffs on cryptocurrency miners. But one of the main questions is what benefits mining provides to the town. We are dealing with an unregulated space, creating “jobs” for mining a currency that does not physically exist. Some argue there is no economic benefit, while others seem to support the idea that mining these coins creates currency that converts to taxable dollars.
Another issue is that mining requires a lot of processing power. Harvesting power from high-functioning machines consumes a lot of energy, analogous to electricity consumption in a town like Plattsburgh. But, what if, mining could be done off of idle machines (computers, tablets, other devices), that remain on throughout the day, but aren’t necessarily used on a daily basis? Halsey Minor, CEO of Live Planet, a strategic technology partner and an investor in the VideoCoin Network, may have the solution.