How Bitcoin mining devastated this New York town

In January 2018, there was a cold snap. People turned up their heat and plugged in space heaters. The city quickly exceeded its quota of hydropower, forcing it to buy power elsewhere at much higher rates. McMahon says his Plattsburgh home’s energy bill jumped by $30 to $40 a month. “People felt there was a problem but didn’t know what to attribute it to,” he says.

As the long winter began to thaw, neighbors noticed a new disturbance: mining servers generate an extreme amount of heat, requiring extensive ventilation to avert shutoffs. Those fans generated a constant, high-frequency whine, McMahon says, “like a small-engine plane getting ready to take off.” It wasn’t just the decibels, but the pitch: “It registers at this weird level, like a toothache that won’t go away.” Carla Brancato lives across the river from Zafra, a crypto-mining and hosting company owned by Plattsburgh resident Ryan Brienza. She says that for several years her condo vibrated from its noise, as if someone were constantly running a vacuum upstairs. 

Meanwhile, the automated nature of these servers meant that the new mines provided few local jobs. “I’m pro–­economic development,” Read says, “but the biggest mine operation has fewer jobs than a new McDonald’s.” Plattsburgh doesn’t have a city income tax, and most miners lease their buildings, meaning they aren’t paying property taxes. Elizabeth Gibbs, a city councilor, was shocked when she went to tour one of the operations. “I was blown away by how hot it was—so hot and so loud,” she says. She describes a warehouse filled with hundreds of servers in stacks, connected by umbilical-like wires, with doors and windows left wide open to let cool air in.

Read, who became mayor in 2017, decided to impose a moratorium on new crypto mines until the city could figure out what to do. First, the New York Public Service Commission created a rider requiring high-density users to pay higher rates. It also required crypto companies to cover specialized infrastructure up front and put down a security deposit to ensure that their bills got paid. Based on two months of electricity use, Coinmint’s deposit was $1,019,503. The company spent two years pursuing appeals with the New York State Department of Public Service. “In the end, they lost,” Treacy says.