On Thursday night, city council of Plattsburgh, New York approved a moratorium for 18 months on bitcoin mining for new entrants. The ban will impact mining of other altcoins too. Plattsburgh will use the temporary ban to examine how to combat the bitcoin mining that has turned a power guzzler for the city.
At the latest meeting of the city council Plattsburgh debated the issue and arrived at the decision that no new entities in bitcoin mining is to be allowed for the upcoming 18 months. However, the moratorium will not be applicable to the cryptocurrency mining operations that are already in existence. Speaking to Motherboard, Colin Read, the Plattsburgh Mayor stated that his city offered the cheapest electricity anywhere in the world, thanks to her proximity to a hydroelectric dam. The national average cost of electricity is more than 10 cents per kW, whereas it was just 4.5 cents in Plattsburgh. However, the city had decided that industrial operations should get an even better deal and decided on 2 cents per kW. That decision brought a bunch of bitcoin miners to Plattsburgh.
Bitcoin mining consumes enormous amount of electricity
While Plattsburgh gets the credit for initiating tough action on bitcoin mining in relation to its power consumption, concerns have been expressed elsewhere around the globe too on how Bitcoin alone could consume more power than some of the advanced nations around the globe. However, cheap power has always attracted bitcoin miners and Plattsburgh with the pricing of 2 cents per kW was an attractive destination. But, for Plattsburgh bitcoin mining became a nightmare of sorts with citizens paying significantly more for the power they consumed.
How Bitcoin mining started hurting Plattsburgh
104 MW of electricity is the allocated amount per month for Plattsburgh, according to Motherboard. Once the city exceeds this limit, additional power should be purchased from the open market at a significantly higher price. In January last, the city ended up using too much power and everyone saw steep rise in their electricity bills. In some instances, the increase was in the range of $100 to $200. However, during the winter months this was a common phenomenon. But, it was observed that in January Coinmint, the largest among bitcoin mining entities in Plattsburgh used up 10% of all the power allotted for the whole city. Consequently, it was noticed that just two cryptocurrency mining companies contributed to an increase of $10 in the January bill for every consumer in the city.
Local law makers are now planning to work with the bitcoin mining companies presently in existence and buy time using the moratorium, before arriving at a permanent solution. Meantime, the power authorities have also been empowered to impose tariffs for crypto miners and these entities may also be required to cover potential overages.
Economic impact of bitcoin mining
The larger question in this context is the economic impact of bitcoin mining on society. When a city or town has cheap or excess electricity and decides to incentivize industrial activity, it would also be expected to translate to some economic development for the region. But, with bitcoin mining, this seldom happens because employment generation from investments in bitcoin mining is precious little since nearly all the activity is machine centric. A high end bitcoin miner generates just about 0.40 bitcoins per month!
Interestingly, however, most bitcoin mining companies are willing to pay up higher charges for the electricity consumed , so long as local councils or other utility companies can undertake to meet their power needs.