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Wednesday 21 March 2018

Here's Why One City Is Banning Bitcoin Mining (And Why It's A Good Idea)

Here's Why One City Is Banning Bitcoin Mining (And Why It's A Good Idea)

Cryptocurrency is pretty much officially out of control. Bitcoin, the leading example of cryptocurrency on the market, finally had its coming out party in 2017 after years of ridicule.
Early investors saw an investment of $100 in 2011 balloon to more than $4 million by 2017. But there's a dark side to all of this.

Cryptocurrency needs to be mined.

Not literally mined, but created electronically. Unlike traditional currencies, cryptocurrency requires a massive amount of computing power for every transaction.
And if you need massive amounts of computing power, you're going to need massive amounts of electricity.

Every cryptocurrency transaction is tied to the last.

For security and verification purposes, every transaction contains the data from every other transaction that came before it. That means that every time there's a transaction, massive — and growing — amounts of data are used.

So how does one mine bitcoin?

First, they need a powerful computer to handle the amount of data that's being transferred. Second, there needs to be a power source. This isn't hard to find, but the cheaper the power, the better — because they'll need a lot of it.

Here's where Plattsburgh, New York factors into this story.

A picturesque city on Lake Champlain, near the borders with both Vermont and Canada, Plattsburgh has long had favorable electricity costs compared with the national average.
Yeah, you can probably see where this is going...

Cryptocurrency mining operations have been flocking to Plattsburgh in recent months.

Thanks to hydroelectric power in the area, energy rates in Plattsburgh are nice and low — perfect for a commercial bitcoin mining operation.

Before we get into this, let's take a look at why this is a big deal.

We don't have infinite electricity, and crypto-mining really uses up the juice we do have.

Here's how much power one transaction takes.

It would literally be enough to power nine average homes in the United States per day. It's unsustainable, and it's growing. Some countries are experiencing blackouts as a result.

Plattsburgh has said "enough is enough."

The city has imposed an 18-month moratorium on commercial cryptocurrency mining. It isn't quite an outright ban, but it's a proactive measure designed to conserve energy.

This comes after Plattsburgh residents saw huge spikes in their electrical bills.

Mayor Colin Read says some people were seeing extreme bumps in their bills of $100 to $200 a month.

The obvious culprit was commercial cryptocurrency mining.

Just one mining operation in Plattsburgh, Coinmint, used about 10% of Plattsburgh's energy budget alone in the first two months of the year.

With stiff penalties in place, Plattsburgh is set to get its power back.

When the moratorium is approved, fines of $1,000 a day will be imposed on anyone who's commercially mining cryptocurrency in Plattsburgh.

More action will be necessary to curb skyrocketing power usage.

Bitcoin mining is already unsustainable, and rates are actually increasing, making things even more unsustainable. Bravo, Plattsburgh! Your move, everywhere else.

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