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After facing a host of problems caused by a craze for cryptocurrency mining, the former mayor of Plattsburgh, New York, questioned on Thursday the economic benefits of miners moving to an area.
“Counties and cities are drawn to all of these promises of job creation, which when you look at it, and I have it, just don’t materialize,” Colin Read said on CNBC’s “The Exchange.” .
“We had one of the largest bitcoin operators in the world operating here and only generated a handful of jobs,” said Read, who was elected in 2016 and served a four-year term. He is professor of economics and finance at SUNY Plattsburgh.
Bitcoin mining is an energy-intensive process that generates new bitcoin when miners, using powerful computers, solve computer puzzles to verify transactions on the blockchain network.
Some politicians, such as Miami Mayor Francis Suarez, have been pushing to lure bitcoin miners to their cities or states, especially after China recently took steps to restrict the operations of miners in the country.
But, a few years ago, when bitcoin miners flocked to Plattsburgh, a small town of about 19,000 people in upstate New York, for its cheap power derived from the Niagara River, it didn’t take long for the city to start seeing a huge spike. in electricity prices.
After crypto miners started using the energy quota which Read said was 1.9 cents per kilowatt at an industrial hourly rate, he said it caused “an outright uproar among voters over the much higher electricity costs incurred “. After that quota was exhausted, Read said, Plattsburgh had to foot the bill citywide for the difference.
In 2018, the city adopted a moratorium on new cryptocurrency commercial mining operations after residents complained about their bills. The ban ended the following year.
“There is only a fixed amount of electricity that we have to go around,” Read told CNBC. “If you start using 10%, 15% of your supply like we had diverted to bitcoin, that very quickly raises prices everywhere for everyone and also puts a lot of pressure on the network for that matter. “
Read said he was a fan of cryptocurrencies, calling them “the wave of the future”. At the same time, he said he believes other places can learn from Plattsburgh’s experience with an influx of bitcoin miners.
“We have a whole set of building and safety codes in place,” said Read, highlighting a sustainable development policy around recycling some of the heat generated by the extraction process for other uses. .
“So maybe they can avoid with good planning some of the problems that we had to solve on our own,” Read said. He acknowledged that the rules put in place by the city severely curtailed the interest of new companies in setting up mining operations in Plattsburgh.
“Before that, we had a number of applicants every week trying to knock on our door to get in,” he said.
With China’s recent restrictions on cryptocurrencies, mining bitcoin may become easier and more profitable elsewhere. Crypto experts previously told CNBC that as more bitcoin miners are taken offline as a result of the crackdown, the share of other miners in the bitcoin network will increase, which could make mining even more so. more lucrative. The value of bitcoin has seen volatile changes in recent months, however, affecting the profits of miners.
“We’re going to see nations and central banks getting into it, sure, but it just needs to be done right,” Read said, referring to the adoption of cryptocurrencies. “It’s not whether we have to do it, it’s how we have to do it well, and we are not doing it very well yet.”
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