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For the First Time, a US City Has Banned Cryptocurrency Mining (businessinsider.com)

Posted by msmash on from the taking-a-stand dept.

CaptainDork writes: The city of Plattsburgh, New York is imposing an 18-month moratorium on commercial cryptocurrency mining. The official reasoning for the moratorium is to "protect and enhance the City's natural, historic, cultural and electrical resources." Plattsburgh residents have seen skyrocketing electrical bills -- as much as $100 to $200 increases -- as a result of commercial cryptomining operations that mine for cryptocurrencies like bitcoin, according to Plattsburgh Mayor Colin Read, who spoke with Motherboard. The city is taking action to protect its citizens from those rising electrical bills that the city of Plattsburgh says is caused by cryptomining operations.

It turns out that commercial cryptocurrency mining operations used up so much electricity that the city of Plattsburgh exceeded its allotted monthly budget of electricity. One single cryptocurrency mining operation called Coinmint used up around 10% of the city's allotted power supply alone in January and February, according to Motherboard. When its electrical budget was exceeded in January, the city had to buy electricity from the open market at a higher cost, which was distributed among its residents.

26 of 198 comments (clear)

  1. Good by nwaack · · Score: 5, Insightful

    It's about damn time we start putting an end to this idiocy.

    1. Re:Good by Vektuz · · Score: 2

      The electricity company cannot produce infinite electricity at a whim. They have a certain amount of generation capacity, and when demand increases, they can build additional plants - but they are expensive to run and take a long time to build.

      So at any given time there is a fixed amount of peak electricity available (you can't really store it) and the cities and companies basically run on estimates on how much is in use / will be needed, thats the allotment.

      If a city were to suddenly draw 10x as much power, this is a problem, as it can stress the grid. It can be overcome by building additional production facilities, but that takes years.

    2. Re:Good by Anonymous Coward · · Score: 2, Insightful

      Yes, it is a symptom of a larger disease, which is free market capitalism

      If the US didn't learn from the Great Depression that a regulated economy is necessary to avoid misapplication of resources and improper allocation of financial responsibility, then we are all fucked (globally)

    3. Re: Good by peragrin · · Score: 2

      The city probably buys in bulk based on historical forecasts and usages. It then is responsible for distribution in city limits.

      Lots of small towns and cities run their own electric company often at rates lower than normal market will do in that region.

      They then do the maintence on the local grid too.

      The business moved in due to the cheap electrical lied about it's usage(which probably required a waiver from the town) and proceeded to spend.

      Expect to see similar stories as Bitcoin Drops in price.

      --
      i thought once I was found, but it was only a dream.
    4. Re:Good by Anonymous Coward · · Score: 5, Informative

      They didn't ban residential users, they banned companies from coming into their town and setting up a mining operation. The town had previously subsidized power for industrial users, in order to try to attract companies that would create jobs. The bit coin miners will just no longer be getting that subsidy, because they don't create jobs, and use up all the power forcing the town to buy it off the open market and raising the price for everyone.

      two bitcoin mining operations were using 10% of the towns cheap power and increased everyone's bill by about $10 for jan and feb.

    5. Re:Good by bv728 · · Score: 5, Insightful

      Since nobody seems to be putting the actual facts as a response:

      As part of an agreement with the power company, the city gave them the right to build a large hydroelectric dam on city property in exchange for access to an allotment of power at an extremely cheap rate. When they exceed that allotment, the city has to buy off power exchange, which is significantly more, accounting for covering storage, exchange, and transmission costs on the larger network.

      The city very rarely (or never) exceeded that allotment before, and now is. Because of how the contracts are structured, that additional cost is passed on to all consumers on their bill - everyone pays based on time-windowed averaged costs of power over the month, not the exact real cost at the moment of consumption (this is pretty normal due to storage and variable rates per time block otherwise making bills goofy complicated).

      The result is they voted in an 18-month stop on NEW cryptomining operations (existing ones can continue) with a plan to submit to the appropriate regulatory bodies a modification to electrical pricing that would allow them to place the additional costs from the Power Exchange on high power utilization businesses, rather than across all users. The cryptomining operations mostly seem okay with this, as the proposal still sees them get a decent chunk of cheap power.

    6. Re:Good by Darinbob · · Score: 2

      They should charge overage charges to the currency miners and charge them at a higher rate. And they have every right to do so. They should even have a case of doing this retroactively if the mining companies lied about their expected rate of electricty use. They would be in their rights also to give only a certain allotment to the mining companies and pulling the plug when that is exceeded.

      The super cheap price for industrial user (cheaper than residential rates!) was intended to bring in jobs. That's a naive plan that too many cities fall for, sweetheart deals to attract a larger tax base, which rarely works out. That's because there's more automation now, fewer jobs arrive to offset the industry discounts. City councils are often thinking about the good old days when a new factory would need lots of workers all eager to go out and buy houses and pay sales tax; and local citizens are all thinking that a new industry will need lots of local unskilled workers and thus save their economy. Now these cryptominers show and and show the flaws in this thinking as this industry ends up being a net drain on the city.

    7. Re:Good by Obfuscant · · Score: 3, Informative

      Yes, it is a symptom of a larger disease, which is free market capitalism

      Nonsense. It is a symptom of government control and the controllers being inept. This is a city utility where the overly-egalitarian management thought that charging everyone more when high-users pushed the costs up was a good idea.

      Even a moment's thought would have shown why that is a bad idea. It shouldn't take Gramma getting a $400 electric bill to pay for a cryptominer's electricity to wake people up.

      You might have missed -- this wasn't a free market operation to start with. The city negotiated an artificial limit on supply and a poor rate structure for reselling that supply. The fact that they have to beg the regulatory agencies for the ability to change their rate structure might also be a hint that free-market economics aren't relevant here.

  2. How to enforce the ban by aglider · · Score: 2

    Is the most interesting part!

    --
    Sent as ripples into the electromagnetic field. No single photon has been harmed in the process.
    1. Re:How to enforce the ban by Rosco+P.+Coltrane · · Score: 2

      Cutting the power?

      --
      "A door is what a dog is perpetually on the wrong side of" - Ogden Nash
    2. Re:How to enforce the ban by Oswald+McWeany · · Score: 2

      Is the most interesting part!

      Having a neckbeard results in police having probable cause to search your property for bitcoin mining rigs. The thing is, it's all a scam, they're just trying to steal their Cheetos.

      --
      "That's the way to do it" - Punch
    3. Re:How to enforce the ban by silas_moeckel · · Score: 2

      Commercial as in a datacenter full of rigs not some guy at home.

      --
      No sir I dont like it.
    4. Re:How to enforce the ban by Train0987 · · Score: 2

      It is trivial to catch you. The amount of electricity you use is readily available by the power company and when one address consumes 10% of the entire town's allotment you'll stand out like a sore thumb.

      Law enforcement has been using electricity use to find pot growing operations for decades.

    5. Re:How to enforce the ban by will_die · · Score: 4, Funny

      No officer I am not running a bunch of computers, I'm growing weed.

  3. Difficulty will rise so high by xack · · Score: 2

    That only people with free or stolen electricty will be able to compete. We already see it with malware miners stealing peoples resources. I expect most electric companies will have mining restrictions in a few years, giving rise to “electricity neutrality” debates.

  4. wrong problem by supernova87a · · Score: 4, Insightful

    The city doesn't need to ban currency mining. They need to fix their electricity tariff (rates).

    If currency miners find that it's economical to spend electricity like this, it means that the city is not charging commercial / residential customers the appropriate amounts when they exceed reasonable usage levels. They need to fix that. It probably means that a bunch of other things about their electricity and water and government services are priced incorrectly / being abused as well.

    What can you do? All these local/town governments were set up with rules dating from 50 years ago, and they've never changed or adapted since.

    1. Re:wrong problem by Vektuz · · Score: 4, Interesting

      This is sort of a half-fix but what would ultimately mean is that when a city installs a lot of solar/other stuff (for the benefit of their citizens to lower pollution/electricity costs/etc) and thus have excess cheap power to sell back to the grid or use, bitcoin miners would move in and use up all excess while its cheap, leading to the permanent residents of a town getting no cost benefit to doing it. They might even have to fire up the coal plants again to meet demand.

      I can totally understand permanent residents of a city working with the council to basically say nope to that. They live there. Its their choice, thats how city governance works.

      Otherwise what ends up happening is that the miners move in and starts increasing demand whenever the cost is under a certain amount, which means the cost has a strict floor at the price of bitcoin generation. It can never ever be cheaper than that, because the moment its cheaper than that, miners absorb all the excess, causing the cost of electricity to be tied to the price of bitcoin, something you probably don't want for your city if you live there, especially if you've been investing in infrastructure to reduce energy prices / clean pollution.

      It gets worse, too. You might decide 'fine, let the market decide', so you are forced to build more electricity-producing plants to meet this rising demand and keep pushing costs down or face brownouts / blackouts in residential. Its really, really really expensive to build electric generation plants and the infrastructure to support them, and it takes a really long time, and they are expensive to maintain running, even if you 'turn them off'. But the miners move out whenever there's some other better opportunity elsewhere, leaving you with all this infrastructure your permanent residents payed for and are being taxed on...

  5. Scenario by SuperKendall · · Score: 2

    *Police bust through the door*
    FREEZE! YOU ARE ALL UNDER ARREST FOR MINin....

    *sees monster MJ grow op with lights and plants everywhere*

    Oh, never mind, carry on then. We thought you had computers usin' all that 'lectricity.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
  6. Re:You Can't Have It Both Ways! by Green+Mountain+Bot · · Score: 2

    Electric vehicles reduce the use of other resources in exchange for increased use of electricity. Bitcoin mining has no such positive externality.

  7. Old ideas that are still unproven by OrangeTide · · Score: 5, Insightful

    If the US didn't learn from the Great Depression that a regulated economy is necessary to avoid misapplication of resources and improper allocation of financial responsibility, then we are all fucked (globally)

    I'm very confident that we learned little. We're still pushing 100 year old ideas of laissez-faire capitalism, supply-side economics, and trickle-down economics. Even in the 19th century the ideas of trickle-down were well known enough to be controversial in its day.

    "That's what happens when the Republicans take over—not only Nixon, but any of them. They simply don't know how to manage the economy. They're so busy operating the trickle-down theory, giving the richest corporations the biggest break, that the whole thing goes to hell in a handbasket." -- President Lyndon B. Johnson

    --
    “Common sense is not so common.” — Voltaire
    1. Re:Old ideas that are still unproven by Curunir_wolf · · Score: 3, Interesting

      They simply don't know how to manage the economy.

      Nobody does. It's the authoritarians that think they know how to "manage" an economy better than 300 million free agents that creates nightmares.

      --
      "Somebody has to do something. It's just incredibly pathetic it has to be us."
      --- Jerry Garcia
  8. Comment removed by account_deleted · · Score: 2

    Comment removed based on user account deletion

  9. It should ban all high electricity use by 140Mandak262Jamuna · · Score: 2

    Why ban crypto currency alone? That is discrimination.

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
    1. Re:It should ban all high electricity use by Curunir_wolf · · Score: 2

      Why ban crypto currency alone? That is discrimination.

      Because it's a useless activity that does nothing for anyone but suck up resources that could be put to productive use?

      --
      "Somebody has to do something. It's just incredibly pathetic it has to be us."
      --- Jerry Garcia
    2. Re:It should ban all high electricity use by youngatheart · · Score: 2
      From TFA:

      the US average is a little over 10 cents per kilowatt-hour...

      Plattsburgh... industrial operations, which include cryptocurrency operations, paid even less at 2 cents per kWh for electricity. Plattsburgh obtains its electricity from a hydroelectric power dam... The city's moratorium isn't designed to remove cryptocurrency mining from Plattsburgh.

      The city was able to make a deal to give a very attractive benefit to it's residents and businesses, a benefit which stopped making sense when they started exceeding their capacity. Now they're having to respond to an emergency situation and doing it thoughtfully. It's only making a big news splash because it has the right buzzwords for clickbait. If this were a city with cheap water responding to a sudden surge in bottled water companies, it'd be the same basic situation, but zero clickbait interest.

  10. Re:Proof by assertion is not much of a proof by drinkypoo · · Score: 2

    Ummm, no. Capitalism is not the best of the alternatives. I doubt many on Slashdot know of any alternatives. (Communism is not an alternative, it is a theory of control not currency. Barter is not an alternative, barter is simplified capitalism.)

    You could have saved yourself a lot of trouble with a look at a dictionary. The definition of capitalism is that capital controls the means of production. It's not about the form of currency, it's about the form of control.

    --
    "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"