First US City Passes Law Banning Crypto Mining
Mar 19, 2018
Mining for cryptocurrencies has become very lucrative as the value of cryptos has soared. This has encouraged a growing number of technologically-savvy people to take up the practice. While the growth of mining may provide a boon to cryptocurrencies as it expands blockchain networks as well as the circulating supply of coins, it can also have adverse effects. As was seen this week when Bitcoin mining was banned in the upstate New York town of Plattsburgh for 18 months, there may be a growing pushback by communities towards crypto miners. While it is a smaller concern presently, this may ultimately contribute to the stunted growth of cryptocurrency markets.
Plattsburgh, New York is a town that is in a rather unique position. It has access to inexpensive electricity from the hydropower facility on the nearby St. Lawrence River. The relatively cheap cost of electricity in Plattsburgh has served to draw in cryptocurrency miners, as the process of mining requires substantial amounts of power to be successful. The problem in this situation is that residents are only allotted a certain amount of hydropower per month before they are charged higher electricity rates. Due to the high electricity burn rate of mining, the town has gone through this allotment in both December and January. This has raised the cost of electricity for some residents of the town by as much as $300, leading to a call to action. Plattsburgh responded with an 18-month moratorium on Bitcoin mining, with violators facing a $1000 per day fine.
This is the first case of a city in the US banning cryptocurrency mining. While not a significant deterrent to the upward momentum of cryptocurrencies, it is certainly a development to keep an eye on. As crypto mining becomes more widespread, more situations may arise in which residents demand their towns limit mining in their area. If this becomes a large-scale problem, state or possibly even federal action may need to be taken. While this is a hypothetical situation, and may never actually come to fruition, this would have a clearly negative impact on the growth of cryptocurrencies. The banning of Bitcoin mining in Plattsburgh may be an outlier, but it also may be the start of a trend. This is a situation that cryptocurrency investors should stay aware of.