A Small American Town Wants to Put a Moratorium on Bitcoin Mining

Plattsburgh is worried about Bitcoin’s energy consumption.

Jordan Pearson

Jordan Pearson

Image: Shutterstock

In Plattsburgh, a town of 20,000 people in New York state, an old paper mill in the city recently flipped into a Bitcoin mining operation—a sign of the times on par with Walmarts transitioning into online shopping fulfillment centers.

Now, Plattsburgh could become the first municipality in the US to put a moratorium on Bitcoin mining. According to a proposed law tabled by the mayor on March 1, the city is seeking to put an 18-month moratorium on any new Bitcoin mining operations while new regulations around zoning and electricity use are drafted. A public meeting to discuss the proposal is planned for March 15.

The main impetus for the proposed moratorium is electricity use. Bitcoin mining secures the public ledger at the heart of the system and involves dozens—or hundreds, or thousands—of computers crunching math problems in a race to find a particular value. These machines need to run 24/7, they run hot, and they eat up a ton of electricity. This has frustrated environmental advocates, and with the proposed law in Plattsburgh on the table, the electricity debate about virtual currency is about to get very real.

Read More: Bitcoin Is Unsustainable

“I think the proposed law is unnecessary and I'm worried that Plattsburgh could miss out on an opportunity for innovation,” David Bowman, an entrepreneur who runs a Bitcoin mine in an old paper warehouse in the city, wrote me in an email. “It's basically in the early stages of development like the internet was. In my view an outright moratorium would hurt the city more in the long run because it would miss out on all that.”

In February, Plattsburgh Mayor Colin Read told the New York Times that the two Bitcoin mining operations the city is aware of—including Bowman’s—consume about 10 percent of the city’s power resources. The city’s Municipal Lighting Department told local NBC affiliate WCAX3 that these miners can consume 11.2 megawatts of juice. This, Read told the Times, is spoiling a sweet deal for cheap electricity for Plattsburgh’s residents. Read was not immediately available for comment.

Plattsburgh’s cheap electric rates have been the marvel of the US for decades, since the city is guaranteed a fixed supply of cheap hydroelectric power thanks to a deal that arose from the construction of hydroelectric dams in the 1950s. Mayor Read told the Times that Bitcoin mining is draining this cheap supply and forcing the city to buy extra power on the open market, which is much more expensive and drives up rates.

According to Bill Treacey, manager of the Municipal Lighting Department, normal seasonal upswings in power usage already force the city to buy additional power and Bitcoin may be adding more strain.

“Bitcoin mining operations are adding on top of that, so we have to buy more power—definitely this year we’ve had to buy a lot more power,” Treacey said over the phone. “My system only has a certain amount of capacity in it, and if they use that capacity then I’m going to have millions of dollars upgrading.”

Bowman said that he is open to regulations around Bitcoin power consumption that are fair to the city and residents.

“In our case, Plattsburgh has a set amount of cheap electricity and if it goes above that, everyone in the city has to pay more,” Bowman wrote me in an email. “I think it's better to charge the miners more so that people in the city aren't negatively impacted, than an outright ban. But still reasonably so, or companies won't want to set up shop here.”

“I think middle ground should be sought so peoples electric rates don't go up,” he added.

Treacey suggested that the debate Plattsburgh is having over Bitcoin mining could face other regions, too.

“Bitcoin mining is getting push back in a lot of places because people are considering it a waste of electricity,” he said. “The question is becoming: Is this a good use of resources? I don’t know. Someone’s got to figure that out at some point, given the amount of electricity it uses.”

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UPDATE: This article was updated with comments from Plattsburgh Municipal Lighting Department manager Bill Treacey.