The United States has already registered the first prohibition of cryptocurrency mining activities in its territory. This week Plattsburgh, a city of the state of New York, imposed an 18-month moratorium on all new Bitcoin mining firms wishing to use the very cheap electricity of the city; a measure that sought to avoid the energetic collapse of the territory and the increase of the costs of the electricity.
The prohibition was made by the mayor of Plattsburgh, Colin Read, who declared for the national media that it was approved by unanimous vote by the Municipal Council of the city. The proposition was yielded in response to the dissatisfaction of the residents of Plattsburgh, who last January had to pay electricity bills larger than usual due to the excess demand generated by mining operations, on top of the usual extra spending due to the winter season.
The bills cost between $ 100 and $ 200 per resident, a rate radically different from what customers are accustomed to paying. Plattsburgh is considered the city of the United States with the cheapest electric power, since residents pay only 4.5 cents per kilowatt hour and industrials only 2 cents, including mining companies.
The city is supplied by the hydroelectric dam of the San Lorenzo River. However, this energy platform does not produce large amounts of energy and, therefore, the territory has only an allocation of 104 megawatts per hour of electricity per month. A considerably small supply for the extreme energy expenditure generated by cryptocurrency mining operations.
For example, Read noted that the largest mining operation in the city, which was operated by the Puerto Rican-based company Coinmint, used 10% of the city’s energy budget in both January and February; a situation that forced the city to buy energy in the open market much more expensive, a cost that was distributed among all citizens.
As much as Plattsburgh offers itself as a territory with excessively cheap energy, it is not entirely thrilled about having caught the attention of the cryptocurrency mining industry. The residents of the territory consider that a widespread attraction of miners wishing to settle in the place could not only increase the price of electricity in all homes but also generate problems of supply in the city.
Colin Read stated-
“We could use 100 megawatts in two months of time if we opened the floodgates. Then there would be no cheap energy for our residents. Some of the proposals we have contemplated suggest taking 20 or 30 megawatts of power, and we do not have that.”
In this regard, Read said that the halt will only affect the new commercial mining operations and not the firms that already carry out activities currently in the territory. He also stressed that the measure will be provisional since these 18 months of prohibition will be used by government authorities and mining companies in order to generate a solution to the problem.
Some of the solutions proposed by the council members are to make miners pay the city’s excess budget when they have to buy additional energy or, on the other hand, increase the rate per kilowatt hour to all companies that practice mining in the territory.
At the moment, the mining industry has ruled against the 18-month moratorium. However, they say they are willing to work with the government to create a solution that is truly equitable and resolves the problem without major setbacks.
Tom Pillsworth, a partner at the second largest Bitcoin mine in Plattsburgh, said there will be no major setbacks for the mining sector in this city. In this sense, companies in the mining industry are willing to pay the surplus for all those months with higher electricity costs, a measure that seeks to keep mining farms working in that territory.
“It would never cost the citizens of Plattsburgh more money to allow more miners to enter here because the miners are willing to pay those surpluses when it is very cold. The miners are more than willing to pay.”– says Tom Pillsworth
Undoubtedly, an offer that would be beneficial for both parties, since citizens could be exempt from paying excessive expenses in the winter season.
The authorities of Plattsburgh would have shown at first interested in the possibility of attracting the attention of the mining industry, knowing that their low electricity costs were highly seductive characteristics for the companies dedicated to this sector. However, faced with the increasingly high demand, the authorities have begun to rethink the issue of cryptocurrency mining.
This type of change of opinion in the face of excessive energy expenditure generated by mining operations has already occurred before. Territories from different latitudes have begun to express their discontent with the flourishing of mining industries in places whose electricity rates are extremely low; a reality that has led them to take measures to avoid an energetic breakdown and the loss of capital for the State.
For example, the province of Quebec in Canada would have been highly receptive to the gigantic flow of mining companies that would have wanted to establish themselves in the territory. However, the government authorities changed their minds, considering that mining was an activity that generated high electric costs and few social benefits.
Likewise, China has also begun to consider the realization of electrical cuts and the application of new collection systems in the face of the strong wave of mining companies that are installed in its territory, a decision that could significantly limit Bitcoin operations in that country.
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