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This City Just Passed the First Bitcoin Mining Ban in the US

Plattsburgh, New York has imposed an 18-month moratorium on Bitcoin mining to prevent miners from using all the city’s cheap electricity.

On Thursday evening, the city council in Plattsburgh, New York unanimously voted to impose an 18-month moratorium on Bitcoin mining in the city.

Mining is the extremely energy-intensive computational process that secures the Bitcoin blockchain and rewards miners with bitcoins. The Bitcoin moratorium was proposed by Plattsburgh Mayor Colin Read earlier this month after local residents began reporting wildly inflated electricity bills in January. The moratorium affects only new commercial Bitcoin operations and will not affect companies that are already mining in the city.

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“I’ve been hearing a lot of complaints that electric bills have gone up by $100 or $200,” Read said. “You can understand why people are upset.”

According to Read, Plattsburgh has the “cheapest electricity in the world” due to a hydroelectric dam on the St. Lawrence river and residents pay only 4.5 cents per kilowatt-hour. (For the sake of comparison, the US average is a little over 10 cents per kilowatt-hour). Industrial enterprises—including Bitcoin mines—in Plattsburgh pay even less: Just 2 cents per kilowatt-hour.

Although Read said this lower rate was to incentivize industries to set up shop in the city, it has also made Plattsburgh increasingly attractive to cryptocurrency miners, who depend on cheap electricity to turn a profit on mining.

The problem is that Plattsburgh only has an allotment of 104 megawatts of power per month. The biggest Bitcoin mining operation in Plattsburgh, operated by a Puerto Rican company called Coinmint, used roughly 10 percent of the city’s total power budget in January and February.

Tom Pillsworth, a local who is a partner at a Plattsburgh Bitcoin mine, adjust a rack of Antminer S9 Bitcoin miners. Image: Daniel Oberhaus/Motherboard

In January, Plattsburgh went over its power allotment and was forced to purchase electricity on the open market for far higher prices. This cost was distributed among the city’s residents, some of whom ended up paying between $100 and $200 more for their electricity than usual. Although the city power utility acknowledged that this often happens during the winter months, the residents of Plattsburgh were concerned that the city’s cheap power would draw still more Bitcoin mining operations to the city and its cheap power would disappear forever.

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"We could use 100 megawatts in two months’ time if we opened up the floodgates,” Read told Motherboard. “And then there would be no cheap power left for our residents. Some of the proposals we’ve been seeing, they want to take 20 or 30 megawatt bites of power, and we don’t have that."

In the next 18 months, city officials pledged to work with citizens and local Bitcoin miners to develop a solution to Plattsburgh’s energy problem. Read suggested a number of possible solutions, such as making miners pay for any overages of the city’s power budget or increasing the kilowatt rate for miners. The local miners, while against the moratorium, all said they were willing to work with the city on an equitable solution.

“It would never cost the Plattsburgh citizens any more money to let more miners come in here because the miners are willing to pay for those overages when it's super cold,” Tom Pillsworth, a Plattsburgh local and partner at the second largest Bitcoin mine in the city, told Motherboard. “The miners are more than willing to pay.”

Correction: A previous version of this article stated that the city of Plattsburgh had a 104 MWh allotment per month, when it actually has a 104 MW allotment of power each month.

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