After debating the issue for some time, Plattsburgh city council in New York has passed a moratorium on Bitcoin mining operations on March 15th for the next year and a half. The measure, which passed unanimously, means no new crypto mining companies will be able to benefit from the cheap electricity the small northwestern town in New York offers.
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Plattsburgh the First Town in New York to Freeze Mining Operations
Plattsburgh, a town in the North County of the U.S. state of New York with a population of 20,000, has said a firm no to new cryptocurrency mining projects. Crypto miners are drawn to the county due to its cheap electricity which it generates from renewable resources, and the small town is already hosting to two major mining facilities in the vicinity.
Crypto mining is an energy-intensive activity and hence is most profitable where electricity costs less. As mining cryptocurrencies have gained popularity more and more crypto mining projects are looking for areas where electricity is cheap.
However the energy-hungry nature of the business has reportedly led to a strain on available resources, forcing the local government to seek additional electricity from other sources at double the price, which is hurting the town’s budget.
The last straw that prompted the ban was an increase in electricity bill for locals. Residents demanded the mayor act after experiencing an increase in their electricity bills.
Cheap (and/or subsidized) electricity benefits industries like Bitcoin mining more than ordinary residents, causing some to accuse it of being parasitic. Moreover, mining operations don’t bring much benefit in the form of employment, as it not labor-intensive work.
Generally, Plattsburgh residents pay $0.045/kWh while industries such as bitcoin mining only pay $0.02/kWh.
According to CNBC, the commission release stated, “Had the new rates been in place in January, the two cryptocurrency companies in Plattsburgh would have seen a more than 60 percent increase in their monthly electricity costs.”
Not the Total End of Crypto Mining – Mayor Proposes Alternatives
The new law only to new mining ventures, and thus does not affect operations of existing facilities in the town. Any individual or groups of individuals caught violating Plattburgh’s law can be penalized a maximum $1,000 USD per day.
Mayor Colin Read argued that mining companies have many machines, but very few employees compared to the cost of resources they utilize — making it difficult for him to see local benefit from their activities.
According to Motherboard, Mayor Read proposed possible solutions that include charging miners more for the electricity sourced from the open market, which would normalize residents’ bill charges. Another proposed solution was increasing the per kWh charge just for mining companies.
Local Miners Reaction to Moratorium
David Bowman, founder and CEO of a family-owned mining enterprise in Plattsburgh, told CNBC in an email that he would work willingly with town officials to find a solution that would shed some costs from residents’ electricity bills.
However, he noted a temporary ban is not the solution, as it would push investors to other locations. Crypto mining is still new, and in the future it could aid the economy in ways not yet appreciated.
Towns with a minimal populations like Plattsburgh and few others have always been a major attraction for such mining organizations due to low costs and resources readily available.
So at times when cryptocurrency is gaining momentum and more people are looking to develop mining facilities, such temporary prohibition could hinder the growth of the wider crypto space.
Is the Plattsburgh council’s 18-month ban on crypto mining fair?Let us know in the comments below.
Images via Wikimedia Commons