By now, you’ve probably heard of—and maybe even invested in — the online currency BitCoin. But how are the cryptocurrencies made? Apparently by using a lot of electricity. In Plattsburgh, where there are low electric rates and a couple cryptocurrency entrepreneurs are sucking up lots of power, the mayor is proposing a law to curb the practice.
Plattsburgh Mayor Colin Read introduced a new local law at Thursday’s Common Council meeting and set a public hearing to discuss the proposed regulation. He explained that it would impose a moratorium on commercial cryptocurrency mining operations in the city. “The purpose of this is just to allow us some time to explore this issue. We’ve been asked to address this by our Municipal Lighting Division. Increasingly now with the great use of additional power we are put over our threshold each winter and when we’re put over our threshold the ratepayers of the city of Plattsburgh do pay a higher electric rate as a consequence. So we want to explore these various issues, understand the effects on our ratepayers, find if there’s a Public Service’s Commission solution to this and we need a little bit of time to explore that.”
Cryptocurrency is online digital money; probably the best known is Bitcoin. Mining is how it is released into circulation. It requires numerous computers and substantial amounts of power, so mining entrepreneurs are seeking areas with low electric rates. Plattsburgh benefits from a decades-old hydropower contract that keeps rates low. Mayor Read says Plattsburgh sells power to industrial users at 1 to 2 cents per kilowatt hour and that’s attracting cryptocurrency ventures. “At any one time they could be consuming between 10 and 25 percent of the total output in our city. As a matter of fact we have more power being consumed by a couple of operations than by our largest industries in the city of Plattsburgh.”
Mayor Read notes that cryptocurrency businesses bring no jobs and any benefit to the community is nebulous. "They’ll crowd as many small computers as they possibly can on racks after racks after racks and consume about a megawatt of power. That’s the equivalent of upwards of 500 homes. And all of that energy that’s going to these computers is generating heat in that room. So we feel there’s fire, building code, health and safety aspects to this that we don’t fully understand because this onslaught of cryptocurrency servers is so new to us. We want some time to understand it. We want some time for our MLD Division to be able to sort the capacity constraints and engineering around it. But it’s primarily at this point a health and safety and building codes aspect that we want to explore more fully. It’s never been explored.”
The high-intensity use of electricity is pushing the city above its Purchase Power Adjustment Charge quota. Read, an economist by trade, says utilities across the country with such constraints are concerned as cryptocurrency miners seek low-rate locations. “When we go over the quota we have to go into the spot market and we could literally pay a hundred times more for our power on the spot market than we would have to pay at our traditional wholesale rate. And that then means that all the ratepayers in the city are paying that higher rate for the overage not just the entities that might be pushing us over the overage.”
A public hearing on the proposed moratorium on cryptocurrency mining operations will be held March 15th at 5 at Plattsburgh City Hall.