Bitcoin mining operations have always been attracted to places with cheap electricity, however, this is causing problems in the Niagara Falls region
Bitcoin mining has grown to be a big business, and with that comes a competitive edge as mining operations seek new ways to cut costs and maximize profits. Things like a colder climate, and of course, cheap electricity, are big pulling factors for miners.
The movement of miners to these, usually remote and picturesque, areas is starting to cause problems as residents and local governments from towns and cities around Niagara Falls are starting to feel the influx.
Falls providing cheap power
Because of the Niagara Falls that border Canada and the US in the state of New York, electricity in the surrounding towns and cities is far cheaper than anywhere else because of the hydroelectricity provided.
Plattsburgh, New York, perches on the shores of the vast Lake Champlain on the US-Canada border, for instance, has a quota of cheap electricity available at a low rate- 2.7 cents/kwh for residential or five cents/kwh for industrial use– against a US average of seven or eight cents.
“The resident hobbyists are no problem,” said Plattsburgh mayor Colin Read. “But when out of towners noticed cheap rates just as Bitcoin prices began to spike they flocked here. Currently, 15 percent of our power supply is used by the large Bitcoin operations, which pushes us over the city’s quota on cold winter days, meaning we have to buy power on the open market to meet demand, increasing costs by 30 to 50 percent.”
Indeed, these sorts of rural places in the north of the US are becoming so popular that even China’s biggest mining group, Bitmain, has made a move to the North-East of the States, to Washington.
Problem with the power drain
It is not simply a dislike for the mining operations that has the local governments up in arms, Read, a former economist, says his main concern is that- unlike traditional industries or even server farms- the electricity demand of cryptominers don’t correspond to jobs or investment in the city.
“Per MW of capacity, crypto miners create one one-hundredth of the jobs we would typically see from an industrial user with the same power needs,” Read argues. “Typically, if a company moves into the area they’ll build a factory– that takes six months, offers jobs and invests them in the area. Cryptominers can come and go in a weekend– it’s the most footloose industry I’ve ever seen, the most energy-intensive industry and the least labor intensive.”
The energy that Bitcoin mining uses has caused many people to argue that it is a damaging part of cryptocurrencies and needs to be changed. Some argue on behalf of the planet and its anti-green effects, while those around Niagara also have their reasons.
It remains to be seen how mining will be regulated because of its electricity usage, but there are rumblings as China looks to clamp down as a start as an autonomous province instituted a ban recently.