U.S. Town Bans Bitcoin Mining Due To Excessive Energy Use
(Kitco News) - A U.S. town has become the first to ban bitcoin mining after residents complained of skyrocketing electricity bills.
A small town of Plattsburgh, New York, said last week that it is slapping an 18-month moratorium on cryptocurrency mining “to protect and enhance the City's natural, historic, cultural and electrical resources.”
The city council’s vote was unanimous and the fine for ignoring the ban will be up to $1,000 per day.
Plattsburgh, which has a population of nearly 20,000 people, used to be able to brag about cheap power, which it gets from the St Lawrence River.
But, in December and January, the town used up more than the 104 megawatt-hours of hydro allotted to it per month, which forced Plattsburgh to buy expensive power from the open market.
The decision to ban bitcoin mining was made after a public hearing was called by Plattsburgh’s residents complaining of a surge in their electricity bills.
“I’ve been hearing a lot of complaints that electric bills have gone up by $100 or $200,” Plattsburgh mayor Colin Read told Motherboard. “You can understand why people are upset.”
Prior to this, residents paid about 4.5 cents per kilowatt-hour. This is very cheap in comparison to 10 cents per kilowatt-hour — an average of what the rest of the country pays.
Plattsburgh also gave a price incentive for industrial purposes, which allowed enterprises to use the power only at 2 cents per kilowatt-hour.
According to a Motherboard report, Coinmint has its biggest bitcoin mining center in Plattsburgh, which used about ten percent of the town’s total power supply in January and February.
Local officials have pledged to work with residents to figure out the new rules governing bitcoin mining within the next 18 months.
The ban comes as more information is being revealed about how energy-consuming bitcoin mining really is.
The latest report from Digiconomist said that one transaction by bitcoin miners uses as much electricity as it takes to power 27 houses.
Over the weekend, bitcoin prices struggled to stay above $8,000, with the digital currency last trading at $8,408 after dropping to $7,318 earlier on Sunday, according to Kitco.com's aggregated charts.
The fall below $8,000 would be really concerning for bitcoin miners after a study, conducted by Fundstrat Global Advisors, revealed that at prices below $8,000 bitcoin miners will not make a profit.
For the analysis, Fundstrat assumed the cost of electricity to be at six cents per kilowatt-hour. “Bitcoin currently trades essentially at the break-even cost of mining a bitcoin, currently at $8,038 based on a mining model developed by our data science team,” the study said.