Plattsburgh halts cryptocurrency mining

New companies banned while fix for high power rates sought

PLATTSBURGH — After hearing from both sides of the issue, city of Plattsburgh councilors voted to impose an 18-month moratorium on any new cryptocurrency operations in the city.

But it can be lifted at any time if the city gets a handle on how much electricity cryptocurrency operations can use and how to alleviate burdens on other ratepayers.

“My goal is to protect the ratepayers,” Mayor Colin Read said at Thursday night’s packed council meeting.

“We don’t have an unlimited amount of electricity.”

Two now in city

Electric rates through the city’s Municipal Lighting Department have skyrocketed in recent months due largely to two cryptocurrency businesses that have been operating in the south end of the city during the past year.

Those operations “mine” units of currency such as Bitcoin through banks of specialized computers that grind through numerous algorithms 24 hours a day.

The process uses enormous amounts of power.

The city has noted that the cryptocurrency operations in Plattsburgh, which employ just a few people, use more power than the entire Georgia-Pacific paper mill.

The city gets an allotment of inexpensive hydropower from the New York Power Authority, which allows for MLD to charge low rates.

But when MLD goes over its allotment, it must buy more expensive power on the “spot” market. The mayor said that power can be 50 to 100 times as costly.

The city exceeded its hydro allotment twice this winter, causing residential bills to balloon. And a significantly cold December and January also added to higher bills.

As a result, the city wanted to consider a moratorium until it could get a better handle on the cryptocurrency landscape.

Cost burden

Several people who spoke at a public hearing on the matter Thursday night said they wanted something done because their electric bills are now too high.

“The ratepayers should not be burdened with this,” resident Laverne Hicks said.

Tom Recny, chief financial officer of Mold Rite, which employs nearly 500 workers in the city, said their bill went up $22,000 last month.

The company has been an economic anchor in the community for 40 years with an annual payroll of about $25 million, he noted.

The higher electric rates, Recny said, would hurt their ability to compete in a global market.

“It is important to get a fix on this in light of the impact it has had on the community,” he said.

Noise issues

Ernie Gillespie, who lives across the street from Imperial Industrial Park, where one of the two mining operations is located, said he was concerned about the noise from the large fans used to circulate the massive amounts of heat generated by the process.

“The city went and zoned that area industrial, but they never considered the seven homes that are right there,” he said.

Steven Crane, a computer-science professor at SUNY Plattsburgh, said cryptocurrency operations are all about speculation of a market.

He said the operations that are in Plattsburgh seem to be run responsibly, but all others in the future might not.

“They are drawn by a sense of urgency, and urgency is not good for critical-thinking skills,” Crane said.

“Transforming the world”

Tom Pillsworth, a local businessman and cryptocurrency educator who gives seminars on the topic, said miners use a block-chain method, which is the wave of the future in technology, to secure the currency.

“It is transforming the world,” Pillsworth said.

The Oxford Dictionary website defines blockchain as “a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.”

A moratorium would prevent other businesses that utilize the block-chain method from coming to Plattsburgh.

He said several data firms that employ two or three people could wind up settling here.

“We could become a tech hub,” he said.

“The eyes of the world are on us.”

Cristian Balan, a lecturer for the Center for Cybersecurity and Technology at the School of Business and Economics at SUNY Plattsburgh, said the technology field changes so fast that an 18-month moratorium could be the death knell for any tech companies thinking of coming to Plattsburgh.

“Eighteen months is a lifetime on the internet,” Balan said.

“The message is: You are not welcome here.”

Power options

Doug Butdorf, property manager of Imperial Industrial Park, said other cryptocurrency companies are wanting to set up in the park, and a moratorium could stall their efforts.

He said the park has been making significant investments in outfitting specialized space for such operations and has been exploring alternative power sources so they don’t impact MLD customers.

“A moratorium would affect their plans,” he said.

Councilors wanted to know if the moratorium could be lifted at any time before the 18-month period was complete, and Corporation Counsel Dean Schneller said it could.

Willing to adjust

Kyle Carlton, a spokesman for Coinmint LLC, which operates the cryptocurrency operations in both Imperial Industrial Park and Skyway Plaza, attended Thursday night’s meeting.

Carlton said the company would be willing to talk about ways to alleviate higher costs for ratepayers, such as shutting down for a few days when the city is nearing its allotment of hydropower.

“The last thing we want to see is people’s bills increase,” Carlton said.

“All options are on the table as we seek to partner with the city.”

Coinmint is based in Puerto Rico and employs about 40 people, Carlton said, but he said he was not sure how many are currently working at the Plattsburgh sites.

He said the company does generate economic activity in the region, even though it doesn’t have many workers.

“Any time you have something new there is going to be a lot of misconceptions, and we want to work with the community and provide as much comfort as we can,” he said.

Electrical contractors, specialists who design housing for the mining computers and heating and air-conditioning experts have all worked at the local operations.

Carlton said that as many as 100 people have been contracted and paid by Coinmint.

Unanimous decision

Before voting on the moratorium, the mayor urged the councilors to remember the impact the cryptocurrency operations have had on city ratepayers.

“This is a capacity issue, and we have to watch our capacity,” Read said.

“We have a fixed resource, and we can’t jeopardize that as a community.”

The council unanimously approved the 18-month moratorium.

The council agreed to hold meetings with Balen, Pillsworth, Carlton and anyone else interested in exploring ways to meet the needs of cryptocurrency miners as well as the city ratepayers.


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