(TNS) – Two years after cryptocurrency miners were pouring into this college town near the Canadian border, the boom in this exotic new high-tech industry hasn’t entirely failed. But it calmed down and a sense of reality established itself.
One of the major players in the business left the city amid a price dispute. But Plattsburgh residents filled some of the void by purchasing their own “mining” computers to research this new form of currency and help them with their home heating bills.
Yes, you read that right: “There are dozens if not hundreds of small miners who use excess heat to replace electric baseboard heaters and generate revenue at the same time,” Plattsburgh Mayor Colin Read said in an email. .
Since the purpose-built powerful mining computers use a lot of electricity and disperse heat, people have actually purchased them to do double duty as radiators.
This appetite for electricity also explains why Plattsburgh and other North Country communities are so attractive to miners of Bitcoin and other forms of cryptocurrency. These cities have long-standing agreements with the New York Power Authority to obtain low-cost hydroelectric power from dams along the St. Lawrence River. Electricity is so cheap in Plattsburgh that homeowners use it for heating, which would be prohibitive in most of the state.
The big players in the world of cryptocurrency mining are always looking for low-cost power. Some of them actually put their computer banks in containers, making them easy to move around. North County’s low energy prices were the reason one of the earliest and largest of these mining companies, Coinmint, came to Plattsburgh – and the cause of its decision to largely retire amid a struggle over the electricity prices and a city wanted.
Late last year, Coinmint packed most of its computers into container trailers and moved its operations 80 miles west to Massena, another North Country town with cheap and plentiful electricity and – another plus – empty buildings.
Cryptocurrency mining has exploded through the growth of blockchain technology, where participants enter entries such as deposits and withdrawals into an open online “ledger”. Transactions are recorded in “blocks” linked together by cryptography, or complex mathematical equations that act as a kind of key.
Due to their distributed and open nature, blockchains have been described as a Wikipedia-like system in which members of the public can enter entries.
Futurists see the system as a way to ultimately record things like real estate sales, business contracts, and other transactions in an efficient, paperless, and transparent way.
But blockchains are best known for the cryptocurrencies that live there. About a decade ago, a Japanese programmer known as Satoshi Nakamoto – perhaps an alias – created the first and even better known cryptocurrency, Bitcoin.
Since it can be traded on a blockchain, where deposits and withdrawals are open to all to view and access, it is seen as a millennial type of currency, free from government constraints or manipulations that would increase or decrease its value.
Coins or tokens can be exchanged for cash or, in some cases, used to purchase goods and services.
Since then there have been several brands or variants of cryptocurrency – imaginatively labeled as Ethereum or Ripple – but Bitcoin remains the best known, the product that is for this new monetary system what Kleenex is for facial tissue.
Bitcoin miners use special computers to perform exotic and lengthy math calculations to unravel the cryptography that links the blocks together. When they do, they are rewarded with their own tokens or shares of Bitcoin.
Bitcoin made headlines nationwide in late 2017 when the price of a coin jumped from around $ 900 to nearly $ 20,000.
This created a frenzy, with newly formed companies scrambling to find places with cheap power to house their computers.
“People have started calling from all over the world,” recalled Jonathan Cote of Hydro-Quebec, the provincial-owned utility that provides low-cost electricity throughout Quebec, just across the border with Plattsburgh.
Little impact on work
Mining has posed some problems for host communities.
For one thing, the industry has never been seen as a major job creator, since true math wizards who program computers can live anywhere. A Bitcoin mine only needs a small number of staff members to oversee and monitor the machines.
Coinmint, for example, is based in Puerto Rico. There are Bitcoin miners based in New York, California, Russia and China, where most computers are made.
Due to a lack of local jobs, the New York Power Authority turned down direct sales requests to miners two years ago because they did not meet their job creation requirements.
There were also concerns that some miners would consume so much electricity that public utilities might be looking for other, more expensive forms of energy if their hydroelectric allocations were exhausted.
“This is exactly what we wanted to avoid,” said Cote, who noted that Hydro-Quebec ended up limiting the number of miners they would sell to.
This is also what happened in Plattsburgh in 2018, when miners consumed so much cheap hydropower that residents saw electric heating bills rise as the town’s utility had to buy extra energy on the spot market. .
When some residents saw their costs rise, they complained to the city.
Plattsburgh responded with a moratorium on new miners and the same year the State Public Service Commission allowed cities like Plattsburgh to charge a higher rate for Bitcoin miners if they exceed a pre-set energy usage threshold.
Concerns about the impact on local taxpayers have led to other changes, including an increase in the security deposit charged to Coinmint.
For a while, it looked like the industry had gone bankrupt, but homeowners were still mining and Coinmint stayed in town until late 2019 when they moved much of their equipment.
Coinmint officials could not be reached for comment. But a filing with PSC sheds light on the company’s feud with Plattsburgh, which is ongoing. It notes that Coinmint’s local branch had already paid more than $ 4 million in November for electricity. He also paid a security deposit of $ 250,000.
And a press release in late 2019 found that the excess charge was 5.4 cents per kilowatt hour (KWh), which is higher than the current rate of 2.1 cents per KWh.
For comparison, most rates in New York state can exceed 10 cents per KWh.
Across the border, Quebec’s cryptomining industry achieves 160 megawatts (MW), compared to the province’s 80 MW data centers – networked computer servers that store, process and distribute large amounts of information. Due to their great hunger for low-cost energy, data centers have been opening stores in Quebec for 15 years, while miners have been there for about two years.
Transfer to Massena
Despite their fight with Plattsburgh, Coinmint was welcomed in Massena. Due in part to the decades-long downsizing of aluminum plants and other industries in the region, Massena has a lot of cheap surplus hydroelectricity.
City supervisor Steve O’Shaughnessy said the company’s arrival helped ensure that one of Alcoa’s unused aluminum smelters was not demolished, which would have decimated the city and local school district’s tax base.
“We feared they would demolish the building and reduce the (taxable) value,” O’Shaughnessy said. The building generates more than $ 400,000 annually for local schools, according to published reports.
Massena has seen what tax losses can do. When a former General Motors plant was removed a decade ago, the city’s tuition payments plummeted from more than $ 224,000 to $ 18,000, according to previous reports.
Cryptocurrency mining has also created some opportunities for local entrepreneurs.
A recent graduate of Plattsburgh has developed a company, Zafra LLC, in which it supplies the racks and other mining infrastructure needed to run the computers. It has already expanded into Illinois, converting a closed steel mill into a mining center.
“We’ve grown a lot,” said founder Ryan Prienza from Hennepin, Illinois, about 50 miles north of Peoria, where he was opening a store.
Cryptocurrency prices aren’t what they were in 2017, but they haven’t been depressed. As of Friday, Bitcoin was trading for $ 10,297 per coin, according to Coindesk, an online publication following the industry. It’s half of its 2017 high, but far above its low point.
And Bitcoin will likely be in the news in May when the cryptocurrency is “halved”. Bitcoin’s underlying code requires its supply to be cut in half every four years, meaning computers will have to work twice as much to earn the new coins.
Initially, Bitcoin is scheduled to have only 21 million coins; more than 18 million have already been mined. But since it’s halved, it will take double the computing power to mine a coin, explained David Crouse, an electrical engineering professor at Clarkson University who follows blockchain technology.
“You’ll see a new resurgence of interest,” Crouse said of the halving.
And that will ensure the continued need for ever faster computers and the power to run them.
© 2020 Times Union (Albany, NY). Distributed by Tribune Content Agency, LLC.
