Colin Read, the mayor of Plattsburgh, New York, remembers when the cryptocurrency miners came to his small town on the shores of Lake Champlain near the Canadian border.
It was 2016 and the price of a Bitcoin was up to about $20,000, instead of about $6,000 where it is now.
“All of a sudden our city was descended upon,” Read said.
The miners, who use hundreds of very fast, power hungry computers to solve the math puzzles that underlie the value of the cryptocurrency – and are then paid in that currency – were drawn to sleepy Plattsburgh because of its cheap electricity.
“We have some of the cheapest indusrial power in the world, 2.7 cents per kilowatt,” Read explained. “They came here for that reason alone. They use a lot of power and employ very few people.”
The cheap power comes from hydroelectric dams on the nearby St. Lawrence River that originally powered industries like aluminum smelting, which have drastically declined.
Under a 50-year-old compact, Plattsburgh has access to a monthly quota of cheap power, but if the city exceeds that quota it has to share the cost of buying power at much higher rates.
Once the miners set up shop, says Read, Plattsburgh started exceeding the quota regularly, and local residents’ electricity bills started going up by as much as 50 percent. If you were used to heating your apartment for $80 a month, all of a sudden it was costing you $120.
More shocking, the power costs for Mold-Rite Plastics, a big, important employer in Plattsburgh, and a big user of electricity itself, went up $26,000 in one month, according to Read.
“It was definitely enough to get people’s attention last winter,” Read said.
In March, the Plattsburgh City Council imposed an 18-month moratorium on new cryptocurrency mining operations, the first such ban in the country, drawing coverage from every media outlet from the New York Times to PBS.
“There’s little we can do with the existing operations,” Read said. “We’ll at least ensure the problem doesn’t grow worse and rate payers are protected.”
With the moratorium in place, Plattsburgh is now looking at further regulation to deal with two more problems the crypto-miners brought: Heat and noise.
“Our concern is the largest operators use all that power and dump huge amounts of heat into the atmosphere,” Read said. “A novel aspect of the new local law mandates they have to recycle a certain share of the power or heat generated.”
The new law will go into effect in about a week, according to Read. Meanwhile, the moratorium remains while the town considers the noise problem.
“There’s testimony from one couple across the (Saranac) river from an operator that they have to keep their windows closed in the summer time because of the noise,” Read said. “It’s mostly the fans that generate all the noise to cool the computers and keep them from burning up.”
Read does point to one bright spot in the cryptocurrency mining story in Plattsburgh – a young local entrepreneur trying to design mining operations that are modular and recycle heat.
That would be 19-year-old Ryan Brienza, born and raised in Plattsburgh. Brienza is taking a year off college to run Zafra LLC, a cryptocurrency mining and hosting company, working with people from around the country.
Brienza doesn’t have a name yet for his modular cryptocurrency mining operation, but it’s in a box 12-feet-long, 10-feet-high and four-feet-wide, containing 108 “miners,” i.e. high-speed computers.
Brienza’s prototype for a self-contained cryptocurrency mining operation is made from wood, but the final product will be fully metal and sell for $30,000 each, with bulk discounts available. All the heat from the unit exhausts at a single point, making it practical to capture and recycle.
“We could use it to heat homes in Plattsburgh,” Brienza says. “Our goal is to build them here in Plattsburgh and start deploying them around the city.”
All Brienza needs now is for the moratorium to be lifted, which he believes could happen in as little as a month.