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In sleepy upstate New York, one small post-industrial city has adopted what's widely believed to be the first bitcoin mining ban in the US. On Thursday evening, the city council in Plattsburgh New York voted unanimously to impose an 18-month moratorium on bitcoin mining, per Motherboard.

As we pointed out earlier this month, two large-scale bitcoin mining operations in the town had become a tremendous drain on the local utilities. This is a problem because,according to the Municipal Electric Utility Association, since the 1950s, the city is allotted a certain amount of inexpensive hydropower generated on the St. Lawrence River. Bitcoin miners are often drawn to areas with inexpensive hydro-power, like the Columbia River basin in the Pacific Northwest.

Mining is the extremely energy-intensive computational process that secures the Bitcoin blockchain and rewards miners with bitcoins, and increasingly, environmentalists are worried that the tremendous amount of energy required to power the bitcoin network could adversely impact the environment. Already, the bitcoin network uses more energy on a daily basis than many countries, including the Republic of Ireland...

Energy

The Bitcoin moratorium was proposed by Plattsburgh's Mayor Colin Read earlier this month after local residents began reporting wildly inflated electricity bills. But unfortunately for residents, the moratorium affects only new commercial Bitcoin operations and will not affect companies that are already mining in the city.

"I’ve been hearing a lot of complaints that electric bills have gone up by $100 or $200," Read said. "You can understand why people are upset."

Thanks to a hydroelectric dam on the St. Lawrence River, Plattsburgh has some of the cheapest energy in the US - its mayor claims it's among the cheapest electricity in the world.

JPM

To wit, residents pay only 4.5 cents per kilowatt-hour (the US average is a little over 10 cents). Industrial enterprises, including Bitcoin mines, pay even less, often just 2 cents per kilowatt-hour.

But there's a catch: The problem is that Plattsburgh only has an allotment of 104 megawatt-hours of electricity per month. The biggest Bitcoin mining operation in Plattsburgh, operated by a Puerto Rican company called Coinmint, uses roughly 10% of the city’s total power budget.

The heavy power use forced city employees to purchase electricity on the open market in January at far higher prices. Those prices could be as high as 37 cents per kwh. That cost was distributed among city residents, with some paying between $100 and $200 more for their electricity that month. While this does occasionally happen during the frigid winter months, this year's winter has been relatively mild.

"We could use 100 megawatts in two months’ time if we opened up the floodgates," Read told Motherboard. "And then there would be no cheap power left for our residents. Some of the proposals we’ve been seeing, they want to take 20 or 30 megawatt bites of power, and we don’t have that."

In the next 18 months, city officials promised to work with locals and newcomer miners to develop a solution. Read suggested a number of possible solutions, such as making miners pay for any overages, or increasing the rate for miners.

According to one miner, either of these arrangements would be welcomed by the mining community, which includes a few locals.

"It would never cost the Plattsburgh citizens any more money to let more miners come in here because the miners are willing to pay for those overages when it's super cold," Tom Pillsworth, a Plattsburgh local and partner at the second largest Bitcoin mine in the city, told Motherboard. "The miners are more than willing to pay."

Now that China's crackdown on miners has created an exodus to other parts of the world, clashes between locals and miners in areas where hydro-electricity makes power cheap are bound to become even more common. Case in point: Miners in one Washington State town near the Columbia River are waging a kind of guerilla war against locals over their power usage.

But perhaps the Plattsburgh solution will become a template to help the two sides equitably distributed electricity resources before miners are banned from the US, too.

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The State of New York is already fighting back. Case in point: the New York Public Service Commission on Thursday took action to stop miners from taking advantage of the cheap hydroelectric power found in several places upstate, according to Bloomberg.

"If we hadn’t acted, existing residential and commercial customers in upstate communities served by a municipal power authority would see sharp increases in their utility bills," Commission Chair John Rhodes said in a statement.

The agency is made up of 36 municipal power authorities in the state. In some cases, the miners, which require huge amounts of electricity for data processing, accounted for a third of a municipal utility’s demand, the commission said.