For the first time, cryptomining has been banned by a city in the United States. The process of earning cryptocurrency will no longer be allowed in the city of Plattsburgh, New York, city officials announced this month.
The ban isn’t permanent, but it will prevent any commercial cryptocurrency mining efforts within the city limits for 18 months. The city of Plattsburgh cited the need to “protect and enhance the City’s natural, historic, cultural and electrical resources” as the reason for the ban.
Plattsburgh became a popular destination for cryptocurrency mining operations because of the city’s low electricity costs. The is located near a hydroelectric dam on the St. Lawrence river that keeps electricity costs for residents down to about 2 cents per kilowatt-hour—just a fraction of the U.S. average of over 10 cents per kilowatt-hour.
Those cheap electrical rates are ideal for cryptocurrency miners, as the process can be costly and energy-intensive.
Mining for cryptocurrencies requires users to lend their computer processing power to solve complex mathematical equations needed to authenticate transactions across the blockchain—a distributed ledger that keeps track of all sales and purchases of a particular cryptocurrency. When those equations are solved and the transactions are confirmed, coins are released and provided to people who lend their processing power to the process as a reward for helping complete the process.
By keeping the price of energy down to complete the mining process, cryptominers are able to maximize their profits from their mining efforts. Unfortunately for the residents of Plattsburgh, the cryptocurrency gold rush has resulted in their electricity bills going up.
The monthly bills for many residents have increased by as much as $100 to $200, according to the city’s mayor, Colin Read. Cryptominers have reportedly used a significant chunk of the city’s electrical allotment and has forced the city to purchase additional electricity from the open market for a higher cost.
In an interview with Motherboard, Read warned that the city can’t provide its cheap resources solely to the miners at the expense of the citizens of Plattsburgh. “If we opened up the floodgates…there would be no cheap power left for our residents,” he said.