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Bitcoin United States

For the First Time, a US City Has Banned Cryptocurrency Mining (businessinsider.com) 198

CaptainDork writes: The city of Plattsburgh, New York is imposing an 18-month moratorium on commercial cryptocurrency mining. The official reasoning for the moratorium is to "protect and enhance the City's natural, historic, cultural and electrical resources." Plattsburgh residents have seen skyrocketing electrical bills -- as much as $100 to $200 increases -- as a result of commercial cryptomining operations that mine for cryptocurrencies like bitcoin, according to Plattsburgh Mayor Colin Read, who spoke with Motherboard. The city is taking action to protect its citizens from those rising electrical bills that the city of Plattsburgh says is caused by cryptomining operations.

It turns out that commercial cryptocurrency mining operations used up so much electricity that the city of Plattsburgh exceeded its allotted monthly budget of electricity. One single cryptocurrency mining operation called Coinmint used up around 10% of the city's allotted power supply alone in January and February, according to Motherboard. When its electrical budget was exceeded in January, the city had to buy electricity from the open market at a higher cost, which was distributed among its residents.

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For the First Time, a US City Has Banned Cryptocurrency Mining

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  • Good (Score:5, Insightful)

    by nwaack ( 3482871 ) on Friday March 16, 2018 @02:01PM (#56270761)
    It's about damn time we start putting an end to this idiocy.
    • ...used up so much electricity that the city of Plattsburgh exceeded its allotted monthly budget of electricity.

      Ok, this is a new one on me.

      Since when does a city have an "allotment" of electricity per month??

      I've never heard of such a thing. I never thought electricity was in any form or fashioned rationed out by the power company?

      • by Vektuz ( 886618 )
        The electricity company cannot produce infinite electricity at a whim. They have a certain amount of generation capacity, and when demand increases, they can build additional plants - but they are expensive to run and take a long time to build.

        So at any given time there is a fixed amount of peak electricity available (you can't really store it) and the cities and companies basically run on estimates on how much is in use / will be needed, thats the allotment.

        If a city were to suddenly draw 10x as muc
        • by mysidia ( 191772 )

          and when demand increases, they can build additional plants - but they are expensive to run and take a long time to build.

          No.... they are expensive to build And take a long time to get the government approval to build.

          And building additional plants/capacity is difficult to justify, because overbuilding is an inherent necessity, and they can't turn that around to profit until demand for electricity gradually increases.....

          So anyways: This is an area where Bitcoin could help by generating demand early

          • by jd ( 1658 )

            To combat global warming, we need demand reduced. It's no good producing Starship Enterprise levels of power if everyone is dead.

            • by MemeRot ( 80975 )

              Not true.... we could build some terraform scale powered CO2 scrubbers. Its leaving greenhouse gases in the atmosphere thats a problem, not demand for electricity

          • No.... they are expensive to build And take a long time to get the government approval to build.

            No, they simply take a long time to build. Power stations are big. Big things take a long time to build. You can't just go to Harbour Freight and buy a couple of Siemens 500MW Gas turbines. Even after approval power plants take years to build.

      • The city probably buys in bulk based on historical forecasts and usages. It then is responsible for distribution in city limits.

        Lots of small towns and cities run their own electric company often at rates lower than normal market will do in that region.

        They then do the maintence on the local grid too.

        The business moved in due to the cheap electrical lied about it's usage(which probably required a waiver from the town) and proceeded to spend.

        Expect to see similar stories as Bitcoin Drops in price.

        • The city probably buys in bulk based on historical forecasts and usages. It then is responsible for distribution in city limits.

          What do you mean the "city buys"?

          Everywhere I've ever lived, how much electricity I use is directly between myself and the power company.

          The power company bills me directly for how much energy I use.

          Are you telling me some cities buy electricity and sell it to the citizens as a middleman?

          • You bet. Hagerstown, MD buys electricity on the open market delivered via Potomac Edison (large regional carrier) and then is distributed on city owned wires and poles. Your bills say MELP (Municipal Electric Light Plant) on them, not PE. They used to have their own coal and oil fired generating station but it stopped generating in the 1980's and was finally razed last year.
            • You bet. Hagerstown, MD buys electricity on the open market delivered via Potomac Edison (large regional carrier) and then is distributed on city owned wires and poles. Your bills say MELP (Municipal Electric Light Plant) on them, not PE. They used to have their own coal and oil fired generating station but it stopped generating in the 1980's and was finally razed last year.

              Wow..that is weird.

              I have never in my many years of living in different cities ever heard of, or encountered such a set up with the c

              • I have never in my many years of living in different cities ever heard of, or encountered such a set up with the city acting as middleman between power company and citizens.

                It's a way for the city to make profit on the margin between what the city pays and what they charge residents. It's a stealth tax.

                This city saw it's profits being affected, and possibly eventually threatening to disrupt their entire setup as unnecessary percentage-taking middleman between electrical utilities and customers.

                I wonder how they'll deal with the installation of electric vehicle charging stations coming in the very near future. Hell, I wonder how the US electrical grid as a whole is hoing to dea

              • Try not living under a rock. It is also done with water too.
              • by rlk ( 1089 )

                Municipal power companies aren't that uncommon. They often charge lower rates and provide better service; after an early snowstorm in October 2011 in Massachusetts, the municipal utilities had their towns back in operation a lot faster than the private ones. [wbur.org]

      • So you think the power company can create arbitrary amounts of electricity on a whim? Rather than having a maximum generation capacity before they would have to source power from other providers?

        You've never heard of overage charges in which you pay extra when you use more than a pre-agreed limit on something? DO you not know what the word "budget" means maybe?

        I can't fathom how someone could live in the modern world and never have come across these concepts.

        My water bill, my cell phone bill, my electricity

        • So you think the power company can create arbitrary amounts of electricity on a whim?

          No, but it sounded like the city was the one buying or being allocated power from the electric company rather than the actual customer.

          I've never heard of anywhere where the power company sells to the city and apparently resells to the customer based on what the city had bought or was allocated, etc.

          I've always gotten a bill directly from the power company, not the city.

      • Re:Good (Score:5, Insightful)

        by bv728 ( 943505 ) on Friday March 16, 2018 @03:00PM (#56271201)

        Since nobody seems to be putting the actual facts as a response:

        As part of an agreement with the power company, the city gave them the right to build a large hydroelectric dam on city property in exchange for access to an allotment of power at an extremely cheap rate. When they exceed that allotment, the city has to buy off power exchange, which is significantly more, accounting for covering storage, exchange, and transmission costs on the larger network.

        The city very rarely (or never) exceeded that allotment before, and now is. Because of how the contracts are structured, that additional cost is passed on to all consumers on their bill - everyone pays based on time-windowed averaged costs of power over the month, not the exact real cost at the moment of consumption (this is pretty normal due to storage and variable rates per time block otherwise making bills goofy complicated).

        The result is they voted in an 18-month stop on NEW cryptomining operations (existing ones can continue) with a plan to submit to the appropriate regulatory bodies a modification to electrical pricing that would allow them to place the additional costs from the Power Exchange on high power utilization businesses, rather than across all users. The cryptomining operations mostly seem okay with this, as the proposal still sees them get a decent chunk of cheap power.

        • They should charge overage charges to the currency miners and charge them at a higher rate. And they have every right to do so. They should even have a case of doing this retroactively if the mining companies lied about their expected rate of electricty use. They would be in their rights also to give only a certain allotment to the mining companies and pulling the plug when that is exceeded.

          The super cheap price for industrial user (cheaper than residential rates!) was intended to bring in jobs. That's

          • They should charge overage charges to the currency miners and charge them at a higher rate.

            Why should there be a concept of "overage" on electricity? If you buy a 60A service from the electric company, why shouldn't you be allowed to draw 60A 24/7/365? Isn't it false advertising to put on artificial limits? (This is a perfect analogy for Internet use, btw.)

            But of course, they should have a tiered rate structure with higher rates for higher tiers, IF the costs are actually higher as the quantity goes up. Do you feel the same way about Internet usage?

            They should even have a case of doing this retroactively if the mining companies lied about their expected rate of electricty use.

            Absolutely NOT. The customers were sold a servi

            • Because there may not be that much electricity. Also such a high use puts greater demands on the infrastructure, and so it is more expensive to supply the service. I meant a tiered rate, which is how overage charges are sometimes done, though sometimes tiered rates are by time of day. Especially in the case of this city when the low cost electricity shared with residential users is a fixed amount, you do not want one customer taking most of it.

              Consider if this was the water service. If an industry moves

              • Because there may not be that much electricity.

                What is this a response to? Because what? It's obvious there was enough electricity -- they were buying it and reselling it and charging everyone higher rates. There is nothing in that story about anyone running out of electricity. There was "that much" because they sold "that much" and the customers used "that much".

                I meant a tiered rate,

                Fine, but you said "overage charges", which is a fee applied when you go over a set limit. Different thing altogether.

                Consider if this was the water service.

                I already have, as I used water service as an example of a city utility mak

              • FWIW, PG&E, my power company, charges rates tiered by usage (e.g. the first N kW-Hours are cheaper than the second, third, and fourth N). You can also sign up for a time-of-day plan, which is cheaper most of the time, more expensive from around 2-8 PM. Finally, there's a program which gets you a bit of a discount all the time in exchange for exorbitantly expensive electricity on high demand days (basically scorching hot summer afternoons).

                We used to be on the last plan. My wive loved the discount until

      • Their electricity originates from a hydroelectric plant (ie, a dam), and that is parceled out to various municipalities. Ie, the region's power generation infrastructure that was paid for by tax dollars is being used by regional tax payers. Excess power can be sold on the open market, but the local cities get first dibs.

    • FWIW, here's a link to the story in Plattsburgh's local newspaper which may provide a clearer explanation of the problem. http://www.pressrepublican.com... [pressrepublican.com] And yes, late December and early January did feature some unusually low temperatures -- around -17F(-27C) several nights presumably causing folks to run more electric heaters than usual more of the time.

    • It's about damn time we start putting an end to this idiocy.

      Who knew that cryptocurrency mining would turn out to be tougher on the environment than gold mining?

  • by aglider ( 2435074 ) on Friday March 16, 2018 @02:04PM (#56270775) Homepage

    Is the most interesting part!

    • Cutting the power?

    • Cripple them with fines if discovered, jail sentences if possible.

      Balance risk/reward towards the risk enough and even low chances of discovery don't matter.

    • Is the most interesting part!

      Having a neckbeard results in police having probable cause to search your property for bitcoin mining rigs. The thing is, it's all a scam, they're just trying to steal their Cheetos.

    • You're right. How are they going to find an activity highly correlated with (and outlawed because of) consuming tons of electricity. Why, you would need to track how much electricity every building in town uses.

      • Why, you would need to track how much electricity every building in town uses.

        It's a city-run electric company. They can track how much electricity EVERY customer uses. They can even correlate it with the time of day (if they use smart meters) and service level (60A, 100A, etc). If you use 100% during daylight but not at night, you're probably not cryptomining. If you use 100% at night but not during the day, you're probably a grow op. If you use 100% all the time, here's your search warrant, we're looking for a lot of computers.

        • Are you hearing a "whooshing" sound right now?

          • No, you are hearing a reemphasis of the point that a city run utility is different than a privately run one, if in nothing more than this ability to track users and act upon it. I do not know if the OP was being sarcastic, but my comment supports that if it was.
    • by jd ( 1658 )

      Voltage regulator. The circuit breakers that exist in the power grid already suffice. Just set the point to pre-spike levels for each district. If the district exceeds that, it gets cut out of the grid.

    • Is the most interesting part!

      Same way you refuse any other industrial power purchasing contract: don't sign.

  • That only people with free or stolen electricty will be able to compete. We already see it with malware miners stealing peoples resources. I expect most electric companies will have mining restrictions in a few years, giving rise to “electricity neutrality” debates.
  • wrong problem (Score:5, Insightful)

    by supernova87a ( 532540 ) <.kepler1. .at. .hotmail.com.> on Friday March 16, 2018 @02:09PM (#56270809)
    The city doesn't need to ban currency mining. They need to fix their electricity tariff (rates).

    If currency miners find that it's economical to spend electricity like this, it means that the city is not charging commercial / residential customers the appropriate amounts when they exceed reasonable usage levels. They need to fix that. It probably means that a bunch of other things about their electricity and water and government services are priced incorrectly / being abused as well.

    What can you do? All these local/town governments were set up with rules dating from 50 years ago, and they've never changed or adapted since.
    • Not all electricity consumption is equal. A citizen pays a lot more taxes per Wh consumed than a cryptominer. A factory employs people and thus brings in lots of taxes too per Wh consumed.

      Cryptomining has externalities hard to capture in non discriminatory rates. Any discriminatory rate which accurately captured them would make cryptomining there unsustainable any way, so might as well ban it.

      • by mysidia ( 191772 )

        How about, things like you know:

        Premium Weighting = (Kilowatt Hours used) Divided by (10 * Number of monthly Worker-Hours + Customer/Guest-Visit-Hours employed inside the facility)

        Then you have an "allowance" based on how much local economic activity is generated.

        Base Price = Standard discounted electric price, e.g. $0.10 / kWh

        Then for the monthly bill...

        Price per Kilowatt hour consumed = (Base Price) + max(0, (G-Factor) x (Premium Weighting) x

      • A citizen pays a lot more taxes per Wh consumed than a cryptominer.

        Maybe it shouldn't be this way.

    • All these local/town governments were set up with rules dating from 50 years ago, and they've never changed or adapted since.

      They don't want to change or adapt . . . it's right there in TFS:

      The official reasoning for the moratorium is to "protect and enhance the City's natural, historic, cultural and electrical resources."

      . . . "in the purity of their precious bodily fluids!"

      What will they do when that whippersnapper Elon Musk comes to town, with his newfangled cars that will sap the City's natural, historic, cultural and electrical resources . . . ?

      • It's the kind of city that would also ban solar panels for the same reasons.

        • It's the kind of city that would also ban solar panels for the same reasons.

          Solar panels that can be seen from off the property certainly would be banned unless they were part of the original structure in any historical district, and historical districts are filled with structures that were built a long time before solar panels existed.

          There was a recent story locally about a property owner being fined because the window frames on his new, energy efficient windows in a historic building didn't look like they were made in 1850. It's hard to make progress anywhere that wants to stay

    • Re:wrong problem (Score:5, Interesting)

      by Vektuz ( 886618 ) on Friday March 16, 2018 @02:26PM (#56270955)
      This is sort of a half-fix but what would ultimately mean is that when a city installs a lot of solar/other stuff (for the benefit of their citizens to lower pollution/electricity costs/etc) and thus have excess cheap power to sell back to the grid or use, bitcoin miners would move in and use up all excess while its cheap, leading to the permanent residents of a town getting no cost benefit to doing it. They might even have to fire up the coal plants again to meet demand.

      I can totally understand permanent residents of a city working with the council to basically say nope to that. They live there. Its their choice, thats how city governance works.

      Otherwise what ends up happening is that the miners move in and starts increasing demand whenever the cost is under a certain amount, which means the cost has a strict floor at the price of bitcoin generation. It can never ever be cheaper than that, because the moment its cheaper than that, miners absorb all the excess, causing the cost of electricity to be tied to the price of bitcoin, something you probably don't want for your city if you live there, especially if you've been investing in infrastructure to reduce energy prices / clean pollution.

      It gets worse, too. You might decide 'fine, let the market decide', so you are forced to build more electricity-producing plants to meet this rising demand and keep pushing costs down or face brownouts / blackouts in residential. Its really, really really expensive to build electric generation plants and the infrastructure to support them, and it takes a really long time, and they are expensive to maintain running, even if you 'turn them off'. But the miners move out whenever there's some other better opportunity elsewhere, leaving you with all this infrastructure your permanent residents payed for and are being taxed on...
      • thus have excess cheap power to sell back to the grid or use, bitcoin miners would move in and use up all excess while its cheap, leading to the permanent residents of a town getting no cost benefit to doing it.

        Other than being able to buy the cheap electricity, right, the permanent residents get no benefit.

        You might decide 'fine, let the market decide', so you are forced to build more electricity-producing plants to meet this rising demand and keep pushing costs down or face brownouts / blackouts in residential.

        Costs will go up if you have to build more infrastructure, which should be represented in the rates you charge the customers, in a tiered manner.

        The solution to not having sufficient capacity is to build more. The secondary, temporary solution is to raise prices to reduce demand. That means prices for all uses of electricity. The worst solution is to start banning legal uses, since that only leads to more ban

    • Which if you look at the actual moratorium, that's what they're doing. They just need time to get it in place. Hence the 18 month hold on new crypto-currency mining.
    • Did you even read the fucking summary??

      The city doesn't need to ban currency mining. They need to fix their electricity tariff (rates).

      They banned mining for 18 months until they finish finalized new rates

      It probably means that a bunch of other things about their electricity and water and government services are priced incorrectly / being abused as well.

      The city has a hydroelectric dam on city property. As part of the agreement to let a power company run it, they get a certain amount of heavily subsidiz

    • by jd ( 1658 )

      This is a case where you're far better off nationalizing. It's not like everyone has a wire to the power company they specifically buy from. Set the price per watt at 1.25x time the estimated power cost of generating the average bitcoin in the next quarter. That way, it's not economic and we can use electricity for useful things like Folding@Home and BOINC.

  • This isn't my fault. I only use Bitcoin from green sources.
  • by SuperKendall ( 25149 ) on Friday March 16, 2018 @02:16PM (#56270875)

    *Police bust through the door*
    FREEZE! YOU ARE ALL UNDER ARREST FOR MINin....

    *sees monster MJ grow op with lights and plants everywhere*

    Oh, never mind, carry on then. We thought you had computers usin' all that 'lectricity.

  • No laws required. If you just charge them more for the electricity than the value of the cryptocurrency that can be mined with that electricity, all but the most stupid will stop doing it! I still don't understand why they don't set up commercial operations here in the Northwest, where we have the cheapest electric rates in the country due to proximity to Bonneville Dam.
    • by tomhath ( 637240 )
      That just introduces other problems, like trying to separate commercial versus private use inside a private residence. Which also gets you into zoning issues. Bottom line is that they want to sell electricity to residents and businesses that benefit the residents (like restaurants, etc.). There's no reason for them to encourage a short-term fad like coin mining that has no public benefit and then be stuck with extra power capacity when the fad dies.
      • by jd ( 1658 )

        No problem. You just tell the restaurant owners and customers that the price is prohibitively high because that data centre over there stole all the power. Oh, and baseball bats are 50c each. The marketplace will decide.

  • The ONLY solution they should be considering is properly pricing energy.

    • by tomhath ( 637240 )
      It's a publicly owned utility. The only thing they should be considering is overall public good. The laws capitalism don't apply to the city council.
  • ... just what this coin mining is supposed to be DOING? Is it dedicating massive amounts of computing power to solving scientific problems that require more computing power than is otherwise available?

    Or is it just a bunch of computer science geeks figuring out how to make computers play with themselves?

    • Mining is, essentially, a bunch of computers try to crack a password that another bunch of computers made up (and forgot) in the previous mining step.

      So, pretty much less beneficial than either option you suggested. At least when computers play with themselves we get computers who are really good at Go.

    • by vadim_t ( 324782 )

      Bitcoin mining is approximately this:

      1. Take a bunch of transaction data
      2. Append a random number
      3. Hash the entire thing
      4. If the hash starts with enough zeroes (you get a result that looks like 00000A3234...), and you're the first, success! This earns you money.
      5. If the hash doesn't have enough zeroes, pick a different random number, goto 2.

      The number of zeroes you need depends on the difficulty level, and the difficulty level depends on how many people are participating in the network.

      Now, why do this?

  • I live in California, so this may not apply to their situation. Here we have certain 'tiers' of use, and the price increases as you use more. My first 100kwh might cost 15 cents/kwh, but above that, the price rises to 20 cents/kwh for the next 100kwh, and so forth. I think a better solution for this city would be to incorporate something like this, because I'm not sure how you 'ban' a crypotocurrency company, since it's just computers running in a building somewhere. It would be difficult to enforce.
  • Why ban crypto currency alone? That is discrimination.
    • Why ban crypto currency alone? That is discrimination.

      Because it's a useless activity that does nothing for anyone but suck up resources that could be put to productive use?

    • From TFA:

      the US average is a little over 10 cents per kilowatt-hour...

      Plattsburgh... industrial operations, which include cryptocurrency operations, paid even less at 2 cents per kWh for electricity. Plattsburgh obtains its electricity from a hydroelectric power dam... The city's moratorium isn't designed to remove cryptocurrency mining from Plattsburgh.

      The city was able to make a deal to give a very attractive benefit to it's residents and businesses, a benefit which stopped making sense when they started exceeding their capacity. Now they're having to respond to an emergency situation and doing it thoughtfully. It's only making a big news splash because it has the right buzzwords for clickbait. If this were a city with cheap water responding to a sudden surge in bottled water companies, it'd be the same basic situation, but zero clickbait intere

  • Some suggest that the only way to keep them out is to build a (fire)wall.

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