Plattsburgh has a problem....and when you are a state entity (hammer), everything looks like a target for regulation (nail.)
At first, I wanted to dismiss this story as a case of "the government doesn't know what it's talking about, and it's going to barge in and screw things up." I have a pretty good idea of the RoI on Bitcoin mining at various power price-points. I found it difficult to believe Plattsburgh had enough serious mining operations to produce any appreciable drain on public utilities.
In short, you can't be making that much money doing it in New York state, a top 3 most expensive state to live in the USA. Your competitors are mining from Iceland with free refrigeration and China with subsidized power, along with those who have an entirely free outlet due to work or utilities included in rent.
However, as Jelf Goldbloom once made a career out of saying, "Life finds a way."
As it happens, there is actually a (mathematically and economically challenged, but substantial) cryptocurrency mining presence within the city. City officials say they know of at least 2 confirmed mining farms responsible for using as much as 11.2 megawatts of power, which is approximately 10% of the city's power capacity and more than sizable vendor Georgia Pacific.
This is a problem, because the city is partially subsidized with cheap hydropower from the St. Lawrence river, and this allotment is being eaten up by the increased usage from Bitcoin mining. The difference in subsidized and unsubsidized rates is huge - under 5 cents per megawatt-hour vs 37 cents. The result is a larger increase in net power rates for the city from such uses than would immediately be apparent.
As noted above in the (somewhat inaccurate) profitability calculator, any attempts to mine at 37 cents per megawatt hour are ludicrous. So, these operations are subsisting entirely by poaching the subsidized power allocated to the city.
Given the situation, (socialization of cost with privatization of gains) I don't see any problem with attempts to curb or regulate this behavior. Failing to do so spoils the power subsidy the city has either earned or lucked into. Perhaps an option to feed cryptocurrency forms unsubsidized power-rates after they have used up an allotment typical of a standard household or business would be a fair middle ground.
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Sources: Google, Cryptocompare, BLS.gov, Water Town Daily Times, Zero Hedge
Copyright: Cryptocompare, BLS.gov, DevRant.com
The same could be said about the price spike in computer equipment (namely video cards). It’s unsustainable.
Either AMD or Nvidia (I forget which) thankfully just came out with specific video cards just for mining, so that miners don't have to buy up all the ones for gaming. That will stop driving up the prices of cards ideal for gaming while giving miners cards that are more efficient for their needs.
This was a really interesting read. I'd thought about mining myself when I first started getting into crypto. Actually many years ago I started trying to actually mine. At that time I had free electric too. (But I didn't know what I was doing so gave up without realizing I actually had it working LOL.)
In the end the reason I decided to invest instead of mining is that electric is super expensive where I live. I just don't see how I could compete with people in places with subsidized electric of cold weather (neither of which is my situation). It's good that you worked out whether there really was reason for the govt. to intervene here instead of jumping to a reflex conclusion.
This bolsters my interest in proof of (anything other than work) coins.
No matter what you do, it always ends up being less profitable than you think. You have downtime, crashes, power outages...hardware failures or DOAs, configuration problems...and forget about ever getting the "advertised" hash rates for your hardware unless you are a configuration guru.
You need awfully cheap power to do well at mining IMO. I do believe DPOS is a better option for these and other reasons.
Agree POW/POD/POI is the future. However, I personally think the whole "consuming so much energy" is a narrative used to deter cryptocurrency adoption. I'm not saying there isn't an increase in energy consumption, but how often does the govt/commentators take into account the income generated by miners and complementary services/products?
I think with the POW-energy narrative the governt can mobilize more people too be against crypto and make it easier to pass anti-crypto legislation masquerading as controlling energy prices.
I'm sure sometimes that's what's going on. Governments all over the world are really split on crypto right now. Some states are accepting crypto for taxes and fees. Others are trying to stamp it out. Some nations are issuing their own crypto. Others are making it illegal to do just about anything with it. I'm getting a sense that apart from being taxed sky high (tax on every trade?) our government mostly intends to profit from it. But any given municipality/state can in many ways make their own decisions on that.
I'd have to agree. In most cases, the worries about power usage are rather overblown, particularly given the potential of the technology in question.
The real solution is eliminating subsidies. Let the market sort it all out. All price controls result in market distortions.
True, but occasionally a distortion in the consumer's favor is called for....or necessary for the enforcement of contract, like we need to do with US cable companies.
If US cable companies would not be granted virtual monopolies, that would not be necessary.
Wonderful crypto post
Your post is absolutely brilliant
it's certainly better than your comment......
Zing!
Omg!!!.. that was harsh..lol
Is it good to mine all bitcoin @lexiconical
Generally speaking, no. Mining has very thin margins and you need to have some sort of competitive advantage (free refrigeration, subsidized power) to get an edge.
Thanks for letting me know
That's some seriously impressive research. So whats the answer to mining? If its coming at such a socio economical cost and running on such small margins, is there a better long term solution ? one that would perhaps allow the majority to make a basic income from mining tokens ?
DPOS is the solution that solves the power restrictions and other issues. Whether this is a problem worth fixing for Bitcoin is up for debate, but the answer is probably not...
I actually know people up in that area doing it and trying to scale. I didn't believe that it would be possible there but it's being done. My contact says the pricing in some municipalities is too good to pass up. I wonder how this will shake out.
"My contact says the pricing in some municipalities is too good to pass up. I wonder how this will shake out."
I suspect what will happen is, if they are successful in moving in, they will shortly after be run out of town (or otherwise screwed) by regulation specifically targetting what they thought was going to be their "competitive advantage".
This is probably very common in places with subsidized energy, and you are spot on with this:
In my country we have cheap energy as well, and bitcoin mining is illegal, but for other reasons (we have a currency exchange control).
Hm, this is rather interesting. Doesn't sound like a regime I'd get along with personally.
I have actually come up with a cunning plan...why don't we set up bitcoin farms in Venezuela. Buy a load of generators and generate your own leccy. Diesel and petrol costs nothing there....
If I should drop a lttle investors tip especially those looking to set up mining facility, there is a island in the Caribbean known as Trinidad and Tobago, Oil-rich country with some of the cheapest electricity in the world, great place to consider if you looking to set up your facility...
The question is....what's their wifi like?
On par with most developed countries probably abit better, they rolling out 5G and probably customize package can be arranged
I don't know how electricity pricing works in the US so I'm just applying my knowledge of the Australian energy market here. I'm failing to understand how--if they are such large users of electricity--they are on this cheap retail tariff which I'm assuming is designed to benefit small users. Large energy users generally have to negotiate contracts with electricity providers directly at vastly different rates to what households and small commercial enterprises pay. It's interesting though that they've found a loophole and are using it to their advantage (for now anyway).
That's basically what we've got here, a loophole. I doubt it will be maintained for too long.
yet another example of how socialism (socialized/subsidized anything) only helps a few people at the expense of everyone else.