Plattsburgh officials OK cryptocurrency moratorium

SHARED FROM THE SUN COMMUNITY NEWS

PLATTSBURGH | The Plattsburgh Common Council last Thursday passed a moratorium that will temporarily halt new commercial cryptocurrency operations from moving into the city for the next 18 months.

The measure was passed unanimously 6-0.

“I think a moratorium needs to happen now to stop the bleeding,” said Councilor Patrick McFarlin (Ward 5). “But our public doesn’t deserve to wait for 18 months.” 

Lawmakers said they will use the time to study how to mitigate the impact of cryptomining on the electrical grid ahead of the temporary ban’s termination.

City officials have also raised health and public safety concerns stemming from improper ventilation of the mining operations.

In a time when the city is contending with a structural deficit, an anemic fund balance caused by systemic overspending, rising taxes and projected expense increases, neither the city nor its ratepayers can afford to subsidize large infrastructure upgrades necessary to serve new cryptocurrency operations, said Mayor Colin Read, and the city has recently received a number of requests from miners looking to set up shop.

“My goal is to protect the ratepayers at every single turn,” Read told a packed crowd.

EXPERTS WEIGH IN

While city officials have not identified the two bitcoin operations located in Plattsburgh, Vice identified them as Coinmint and Zafra LLC. 

Local cybersecurity, cryptocurrency and blockchain technology experts say that Plattsburgh could be missing out on an opportunity to be at the cutting edge of a blossoming industry.

Those computers that run 24-7 are doing more than just “mining” for speculative currency, said Tom Pillsworth, a blockchain technology expert who spoke at the hearing.

They’re constantly working to generate a digital ledger called blockchain, which Pillsworth says can offer decentralized, confidential, secure transactions from all around the world.

It’s an area of tech that a host of big names are currently exploring, he said, naming IBM and Wal-Mart as notable examples.

“This is something that’s really transforming the world,” Pillsworth said.

“Don’t blame bitcoin. Look at the bigger picture and realize that this could change Plattsburgh forever.” 

EYE CANDY

The City of Plattsburgh is attractive to miners for a number of reasons, according to Lois Sanchez, a former investment banker and economics professor based in Manhattan.

Its weather is ideal — often cold, which helps combat the heat generated by mining equipment. 

SUNY Plattsburgh is here, which has a legion of students who may be interested in the technology. 

And the city has Plattsburgh International Airport just beyond its borders, Sanchez told The Sun, offering a convenient travel option.

Perhaps most of all, the city has cheap electricity, widening miners’ profit margins.

All of these things combined make the City of Plattsburgh eye candy for cryptocurrency operations.

But the latter can sometimes prove costly for residential ratepayers here.

RESIDENTS DECRY OVERAGES

The city is guaranteed a fixed amount of electricity each month under a rate of $4.29 per megawatt hour. 

When the city’s collective consumption runs over that fixed amount, the city has to purchase more at a rate of $36 per megawatt hour — a nearly 800 percent increase, a cost that’s spread out among every resident and business that uses city electricity.

In the winter, that can result in an average added fee of $30-40 on everyone’s bill, according to Municipal Lighting Department Director Bill Treacy. 

This past December, the city had to purchase an additional 11 million kilowatt hours. That’s equivalent to 11,000 megawatt hours — or approximately $396,000 worth. 

And in the following month, the city had to purchase an additional 16 million kilowatt hours.

Read has attributed this in part to commercial cryptocurrency miners, which he said sometimes make up to 10-16 percent of the city’s total energy consumption. 

“We shouldn’t be burdened with this on our backs,” said one resident, Laverne Hicks, who questioned why the second had been permitted to move in after the city had seen the energy consumed by the first.

The state Public Service Commission last week approved a measure that will allow local power authorities like Plattsburgh’s Municipal Lighting Department (PMLD) to essentially impose a tariff on cryptocurrency miners’ electricity by pushing them into a new rate class.

Read has argued that the decision doesn’t give PMLD the latitude to charge miners extra for costs incurred by ratepayers when the operations push the city’s energy consumption beyond its allocated amount of cheap power.

And blowing that quota is something ratepayers can’t afford to do, he said.

Jeff Moore, a city resident and former mayor of the Village of Champlain, wholeheartedly supported the council’s moratorium, citing a need for the Common Council to have time to get a handle on the situation.

“It’s fine now,” Moore said, citing the frigid weather that’s helping to combat the heat given off by mining equipment. “In the summertime, this is going to be a big problem.” 

A number of experts pledged to help the Common Council find an equitable solution to the city’s concerns and educate lawmakers on the technology, including SUNY Plattsburgh lecturer Cristian Balan, a cybersecurity and technology expert; Lois Sanchez, a former investment banker and economics professor based in Manhattan; SUNY Plattsburgh computer science professor Steven Crain; David Bowman, owner of Plattsburgh BTC; and Pillsworth.