PLATTSBURGH — Two years after cryptocurrency miners were pouring into this college town near the Canadian border, the boom in this exotic new high-tech industry hasn’t quite turned to bust. But it has calmed down, and a sense of reality has settled in.
One of the main players in the business left town amid a price dispute. But Plattsburgh residents have filled some of the gap, buying their own "mining" computers to seek out this new form of currency and help with their home heating bills.
Yes, you read that right: “There are dozens if not hundreds of small miners who use the excess heat to replace electric baseboard heaters and generate some revenue at the same time,” Plattsburgh Mayor Colin Read said in an email.
Because the powerful, purpose-built mining computers use lots of electricity and throw off heat, people have actually purchased them to perform double duty as radiators.
This appetite for electricity also explains why Plattsburgh and other North Country communities are so attractive to miners of Bitcoin and other forms of cryptocurrency. These towns have long-standing agreements with the New York Power Authority to get cheap hydroelectric power from the dams along the St. Lawrence River. Electricity is so cheap in Plattsburgh that homeowners use it for heating, which in most parts of the state would be prohibitive.
Big players in the world of cryptocurrency mining are always seeking the lowest-cost power. Some of them actually put their banks of computers in shipping containers, making them easy to move. The North County's low energy prices were the reason that one of the first and biggest of these mining companies, Coinmint, came to Plattsburgh — and the cause of its decision to largely pull out amid a fight over electricity prices and a $1 million deposit the city wanted.
Late last year, Coinmint packed up most of its computers in container trailers and moved its operations 80 miles west to Massena, another North Country city with cheap, plentiful electricity and — another plus — empty buildings.
Cryptocurrency mining exploded through the growth of blockchain technology, in which participants make entries like deposits and withdrawals in an open online "ledger." The transactions are recorded in “blocks” linked together through cryptography, or complex math equations that act as a kind of key.
Because of their distributed, open nature, blockchains have been described as a Wikipedia-like system in which members of the public can make entries.
Futurists see the system as a way to eventually record things like real estate sales, business contracts and other transactions in an efficient, paperless and transparent manner.
But blockchains are best known for the cryptocurrencies that live there. About a decade ago, a Japanese programmer known as Satoshi Nakamoto — possibly an alias — created the first and still best-known cryptocurrency, Bitcoin.
Because it can be exchanged on a blockchain, where the deposits and withdrawals are open for all to see and access, it’s viewed as a millennial kind of currency, free from governmental constraints or manipulation that would drive its value up or down.
The coins or tokens can be exchanged for cash, or in some instances used to buy goods and services.
There have since been several brands or variants of cryptocurrency — fancifully branded as Ethereum or Ripple — but Bitcoin remains the best known, the product that is to this new monetary system what Kleenex is to facial tissue.
Bitcoin miners use special computers to run exotic and lengthy math calculations to unravel the cryptology that link the blocks together. When they do so, they are rewarded with their own tokens or shares of Bitcoins.
Bitcoin made national headlines in late 2017 when the price of a coin jumped from about $900 to almost $20,000.
That created a frenzy, with newly formed companies scrambling to find places with low-cost power to host their computers.
“People started calling from all over the world,” recalled Jonathan Cote of Hydro-Quebec, the provincially owned utility that provides cheap electricity throughout Quebec, just across the border from Plattsburgh.
Little job impact
The mining posed some problems for the host communities.
For one thing, the industry was never seen as a major job creator, since the actual math wizards who program the computers can live anywhere. A Bitcoin mine needs only a small number of staffers to oversee and monitor the machines.
Coinmint, for example, is based in Puerto Rico. There are Bitcoin miners based in New York, California, Russia and China, where most of the computers are made.
Due to the lack of local jobs, the New York Power Authority two years ago rejected requests to sell directly to miners since they didn’t meet their requirements for job creation. Read More...