PLATTSBURGH — The City of Plattsburgh's proposed moratorium on cryptocurrency mining farms is more about health and safety than high utility costs right now, says the mayor.
"This has all happened so fast and there are so many unknowns to this that we have to figure out a way to make sure it is done right and that we keep the community safe," Mayor Colin Read said.
The city is proposing an 18-month moratorium on cryptocurrency mining farms in the city in the wake of significantly higher utility costs and other concerns in recent months.
The mining farms comprise dozens upon dozens of small computers that are used to encrypt massive numbers of algorithms that enable a unit of currency, such as Bitcoin, to be created.
The process requires major amounts of power.
"They are about the size of a small space heater," Read said of the computers.
They also act like space heaters, throwing out wave after wave of warm air while churning out algorithms 24 hours per day.
Two large mining operations are in the city: one in the former Imperial Mill site and one in Skyway Plaza. Both have been operating for about a year.
According to Investopedia, a cryptocurrency is a digital or virtual currency that uses cryptography for security.
The first cryptocurrency to capture the public imagination was Bitcoin, which was launched in 2009 by an individual or group known under the pseudonym Satoshi Nakamoto.
As of September 2015, more than 14.6 million Bitcoins were circulating, with a total market value of $3.4 billion.
That success led to other competing cryptocurrencies, among them Litecoin and PPCoin, the site says.
Cryptocurrency miners could be considered the modern-day version of the prospectors of the 1848 California Gold Rush.
At times, cryptocurrency operators in the city have used as much power in a month as is consumed by Georgia-Pacific, one of the city’s largest users.
The high usage has put a strain on the city's utility.
The city offers residents and businesses low electric rates through its Municipal Lighting Department. MLD gets its inexpensive power from a hydro operation on the St. Lawrence River.
But when MLD goes over its allotment of hydropower, it must buy additional power on the open market, which can be significantly more expensive.
The increase in cost to the MLD is passed on to consumers in their monthly bills.
Due partly to cryptocurrency usage and to extremely cold months in December and January, MLD exceeded its allotment of hydropower and had to buy more expensive power.
Because of that, customers have seen much higher bills the past two months, some hundreds of dollars over the usual amount.
While the impact cryptocurrency farms are having on utility costs is a concern, Read said, there is little the city can do about that for now. Businesses can't be told they can't use power.
The main issue the city can deal with is safety.
Read said the city is asking for the moratorium so they can figure out proper building and zoning codes to make sure mining farms don't present fire hazards for themselves or their neighbors.
Proper venting of the extreme heat will also be considered.
"We don't want shoddy operations," Read said.
"The moratorium is to give us some time to explore the ramifications of health and safety issues."
Read said the city will also explore the idea of somehow capturing the heat generated by a mining farm and re-using it.
"If there are ways to do that where we both (city and miners) benefit, then we should consider that, too," he said.
As for the cost impact, Read said the Public Service Commission, which regulates municipal utilities, is looking into imposing a tariff on cryptocurrency mining farms in order to alleviate the burden on other ratepayers.
MLD Manager Bill Treacy said the cryptocurrency idea became popular last year when Bitcoin values reached as high as $21,000 each.
As long as cryptocurrency miners pay their electric bills, MLD has to keep providing power to them, Treacy said.
The existing mining operations will not be affected by the moratorium if it is approved at the next Common Council meeting.
The council will hold a public hearing on the moratorium at 5 p.m. Thursday, March 15, before voting on the measure at its meeting immediately following.
Read said numerous currency mining operators want to set up in the city because of the cheap power.
"This can be highly lucrative, and there are entrepreneurs from all around the world looking at us," Read said.
"We are kind of like the canary in the coal mine."
The moratorium would be for those using more than 250 kilowatt hours per year per square foot, which puts them in the High Density Load Service category, and is designed to address the large server farms.
Cyrptocurrency miners with smaller operations in their own homes will most likely not be impacted by the moratorium.
"The hobbyists won't be affected," Read said.
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