City in Upstate New York Issues Temporary Ban on Bitcoin Mining
It’s getting harder to turn a profit mining Bitcoin because it takes longer and electricity isn’t free. There are some places it’s pretty cheap, though. Many mining operations are run out of China for this reason, but there’s one US city where electricity is surprisingly affordable: Plattsburgh, New York. Miners have flocked to this small city in upstate New York, but now the local government is slamming on the brakes. It has instituted an 18-month moratorium on new Bitcoin mining after complaints from residents sick of rising electricity prices.
Residents of Plattsburgh have long enjoyed incredibly low energy prices thanks to a nearby hydroelectric dam on the Saint Lawrence River. The average price for power across the US is 10 cents per kilowatt-hour. In some cities, it can be double that. However, residential customers in Plattsburgh pay a mere 4.5 cents per kilowatt-hour. That’s cheap, but businesses (like Bitcoin miners) only pay 2 cents per kilowatt-hour.
The low cost of electricity has enticed a number of mining operations to set up shop, but the reduced cost for commercial electricity wasn’t intended to support these power-hungry enterprises. This has resulted in big cost increases for everyone, even those who don’t know what Bitcoin is.
The problem is Plattsburgh has just 104 megawatt-hours of electricity per month from its hydroelectric dam. If it goes over, the city has to buy additional capacity on the open market at an increased rate. The cost of doing so is split up among all customers, and it increased bills by $100-200.
As you can imagine, people in Plattsburgh are not happy about the price bump, and they’re placing the blame on Bitcoin miners. The largest miner in the city, known as Coinmint, is currently consuming about 10 percent of the city’s power every month. Some companies have proposed setting up facilities in Plattsburgh that would eat two or three times that much power.
The city has approved the temporary moratorium while it decides how to handle cryptocurrency mining. This doesn’t apply to companies that are already in operation, but the city won’t let any new commercial operations start mining for the time being. Officials have floated several ideas to deal with the mining, including increasing the rate paid by crypto miners and requiring these businesses to pay for any overages rather than force residents to chip in.
Bitcoin miners in Plattsburgh opposed the moratorium, but most are willing to cooperate with the city to find a solution. The alternative is to pay a lot more in another city or move the operation to China.
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