Cryptocurrency mining can be a lucrative endeavor but there are a few caveats to be aware of. Namely, it demands a lot of electricity which in turn generates tons of heat. It's no surprise, then, that those looking to get the best return on their investment seek out locations with cheap electricity and / or a cool climate.
The freedom to pick and choose your mining location isn't really an option for individuals mining on a spare computer in their bedroom but for professional operations, location can be paramount. Find a spot with cheap electricity and a cool climate and the potential profit margins swing in your favor.
Residents in one New York town are fed up with professional mining operations and have convinced local officials to do something about it.
Plattsburg, New York, is an attractive destination for commercial Bitcoin operations. According to Mayor Colin Read, the city offers the "cheapest electricity in the world" thanks to a nearby hydroelectric dam on the St. Lawrence River. Here, residents pay just 4.5 cents per kilowatt-hour and industrial enterprises (like commercial Bitcoin operations) are billed just 2 cents per kilowatt-hour compared to the US average of 10.27 cents per kilowatt-hour.
Unfortunately, even with the renewable energy source, the supply isn't endless. The town has an allotment of just 104 megawatt-hours per month. When you've got one mining operation consuming roughly 10 percent of the supply, well, that's a problem.
In January, the city went over its allotment and had to purchase more electricity on the open market at an inflated rate. The cost, of course, was passed along to consumers.
As Motherboard highlights, residents in Plattsburg began complaining in January when their electric bills soared. According to the mayor, some bills went up by as much as $200. This prompted Read to propose an 18-month Bitcoin moratorium earlier this month and on Thursday evening, the local city council approved the proposal.
It's not unusual for the city to go over its allotment of cheap electricity in the winter months but locals are worried that if more miners come to town, the affordable electricity will dry up for good.
Notably, the moratorium affects only new commercial Bitcoin operations. Those who are already operating in the town aren't impacted. In other words, they're simply looking to deter new operations from setting up shop until a solution to the excess energy usage can be worked out.
Bitcoin's value is down to around $8,500 per at the moment but peaked earlier this year at more than $18,000.
Over the next 18 months, the city aims to work with citizens and professional mining operations on how to solve the issue. The mayor suggested several possible solutions including increasing the rate charged to miners or having them pay for any overages. Local miners are said to be against the ban but are willing to work with the city on a solution.
With precedent now set, it'll be interesting to see if any other cities follow suit and impose similar bans on professional mining outfits.