Cheap power drew bitcoin miners to this small city. Then came the backlash

JUDY WOODRUFF: You have probably heard about
the rise and fall of Bitcoin and other cryptocurrencies. But what you may not have about is the incredible
amount of energy computers need to get Bitcoin and other currencies in the first place. That demand, in turn, is affecting the prices
of electricity in some places. And that’s where our economics correspondent,
Paul Solman, comes in to help explain these connections. It’s part of our weekly series Making Sense. PAUL SOLMAN: Bucolic Plattsburgh, New York,
20 miles from the Canadian border. It sure doesn’t look like ground zero for
a gold rush. But in this mall alone, cryptocurrency prospectors
have installed thousands of mining machines, small computers that gobble energy just to
find new cryptocoins in a vacated space behind the Family Dollar store. And it’s all because Plattsburgh has bargain
basement electric rates. The invasion has the locals up in arms. MAN: These guys that are mining the Bitcoins
are riding into town, taking advantage of the situation. PAUL SOLMAN: And the situation, it turns out,
Plattsburgh is the Klondike of New York. That’s because the cost of mining is all in
the cost of energy. And as Mayor Colin Read says: COLIN READ, Mayor of Plattsburgh, New York:
We have some of the lowest energy costs in the world. PAUL SOLMAN: That’s because this is hydroelectric
land, where dams powered mills like this one last century. And, these days, electric rates in Plattsburgh
are barely a third of the national average, courtesy of a long-term deal for cheap electricity
from Niagara Falls. But there’s a catch. Plattsburgh has a monthly megawatt limit. Exceed it, and they have to pay much higher
rates on the open market. COLIN READ: If we go over the quota, we can
all of a sudden see a huge spike in our electric rates in the winter. It very rarely happened, but it’s happening
on a regular basis since the Bitcoin operators came to town. PAUL SOLMAN: How much higher? COLIN READ: Thirty percent, 40 percent higher. PAUL SOLMAN: And that proved a real budget-buster
for the residents of chilly Plattsburgh. COLIN READ: They’re used to paying, you know,
$100 a month in the middle of winter to take care of all their electricity and heating
needs, to the point where most people in our city, the vast majority, heat with electricity,
because it’s very inexpensive. PAUL SOLMAN: And then there are local companies
who have relied on cheap energy. THOMAS RECNY, Mold-Rite Plastics: Our electric
bills changed overnight. PAUL SOLMAN: Here at the company, you mean? THOMAS RECNY: Yes, 20 to 30 percent increase
in the electric bill. PAUL SOLMAN: Tom Recny of Mold-Rite Plastics,
where 500 workers churn out 11 million products every day. THOMAS RECNY: Caps, closures, jars, and more
recently child-resistant caps for the cannabis market. PAUL SOLMAN: But margins are thin. They were even thinner once Mold-Rite’s electric
bill jumped by $22,000 in March. Plattsburgh was driven over its monthly quota,
says Recny, because miners were gobbling energy. THOMAS RECNY: More than twice what we consume. The impact that they’re having is extraordinary,
for sure. PAUL SOLMAN: A simple video explains what
they use the power for. NARRATOR: Miners use special software to solve
math problems and are issued a certain number of Bitcoins in exchange. PAUL SOLMAN: The software runs on super fast,
super-power-hungry computers, explains MIT’s Neha Narula. NEHA NARULA, MIT: They’re trying lots of different
random numbers to see which one is a solution to the puzzle. And the first computer that figures out the
right random number that’s a solution to the puzzle publishes its answer, and gets Bitcoin
in return for the answer. PAUL SOLMAN: The mayor has a few right in
his office. COLIN READ: They’re just cranking away doing
tens of millions, hundreds of millions of calculations a second, and then hooked to
all kinds of other machines around the world, and they’re all sharing in the profits, in
trying to find the next cryptocurrency solution. PAUL SOLMAN: To find the solution, and then
add it to the so-called blockchain, a running record of all transactions. That takes more power. This machine of Read’s is just a stack of
graphics cards, like those used for gaming. It’s mining for other cryptocurrencies. And this machine? COLIN READ: This here is an actual state-of-the-art
Bitcoin machine. PAUL SOLMAN: The energy use of all these machines
is immense. RYAN BRIENZA, CEO, Zafra: This miner here
will use as much power as my house does a month. PAUL SOLMAN: Nineteen-year-old Plattsburgh
native Ryan Brienza deferred college to run Zafra out of the defunct Imperial Wallpaper
Mill. He hosts 200 machines from clients all over
the country. RYAN BRIENZA: It’s going to cost you more
to plug it in, in New York City, California, or Boston than to host with us. PAUL SOLMAN: Just to plug it in? RYAN BRIENZA: Yes. What you’re paying for power there is more
expensive than what our hosting rate is. PAUL SOLMAN: Moreover, Brienza’s clients don’t
have to cope with the machine noise and the heat. That’s about as long as I can hold my hand
there. And then it starts to burn. RYAN BRIENZA: Sometimes, when I wash my hands,
I use that to dry them off. So… PAUL SOLMAN: You do? RYAN BRIENZA: Yes. (LAUGHTER) PAUL SOLMAN: Brienza’s operation is a drain
on Plattsburgh’s cheap energy. But it’s dwarfed by Coinmint, a Puerto Rico-based
operation, which first set up shop around the corner from Brienza, and then in this
strip mall. No signs. Just open doors and immense fans to vent the
heat. Thousands of machines inside suck up about
10 percent of the whole city’s electricity. Worldwide, the energy footprint of Bitcoin
alone is expected to double by year’s end, devouring an incredible half-a-percent or
more of the world’s electricity, as much as all of Austria. The potential impact on global warming is
obviously profound. But the allure to miners of cheap energy outposts
like Iceland, Washington state, and small, unassuming Plattsburgh is understandable. RYAN BRIENZA: The cheaper the power is, the
more profitable that you can be. PAUL SOLMAN: How much is any given miner making
at the moment? RYAN BRIENZA: On average, I think mine are
yielding like $150 a month per miner. PAUL SOLMAN: Per mining machine, that is. And, argues David Bowman, Plattsburgh gets
something out of this too. DAVID BOWMAN, CEO, Plattsburgh BTC: There’s
not a lot of opportunities here. They have a really hard time retaining young
people. PAUL SOLMAN: Bitcoin mining is a reason to
stay. DAVID BOWMAN: To get some investment in here
in the tech sector, hopefully retain young people that are interested in this whole — because,
really, it’s a young people’s game. PAUL SOLMAN: But Mayor Read, who is also an
economist, says the benefits to Plattsburgh are indiscernible. COLIN READ: Our city gets really nothing out
of it. The industry typically leases space, so we’re
not receiving any property taxes from them. And they employ very, very few people. PAUL SOLMAN: So, is Plattsburgh-bred miner
Ryan Brienza feeling the heat? Does anybody give you a hard time about this? RYAN BRIENZA: I do know some, like, old teachers
and stuff who complain that I made their electric bill go up. But… (LAUGHTER) PAUL SOLMAN: But it wasn’t just his teachers. WOMAN: We shouldn’t be burdened with this
on our backs. PAUL SOLMAN: In March, residents stormed a
city council meeting to complain. Soon after, the council voted to ban all new
mining operations for 18 months. GREG BRIENZA, CTO, Zafra: We have got a substantial
investment in this stuff. PAUL SOLMAN: Electrical engineer Greg Brienza
is Ryan’s father and business partner. The moratorium mothballed the new switchgears
he’d helped install at the old mill to host more mining machines. How much do these things cost a piece? GREG BRIENZA: Several hundred thousand dollars. PAUL SOLMAN: Who’s investment? Yours, or… GREG BRIENZA: The landlord. PAUL SOLMAN: So, he must not be very happy
with the moratorium. GREG BRIENZA: Well, like, I’m not either. PAUL SOLMAN: They’re not giving up that easily,
though. RYAN BRIENZA: We have just been looking for
other places that we can put an operation in, and we have been pursuing that. So… PAUL SOLMAN: Places that don’t have a moratorium. RYAN BRIENZA: We know a bunch of locations
that there’s cheap power at. PAUL SOLMAN: While hoping the ban here will
be lifted, the Brienzas have come up with a seductive alternative: Recycle the heat
from the computers. RYAN BRIENZA: So this is that solution I was
talking about for the city. PAUL SOLMAN: The Brienzas have concocted a
box to house 108 machines, on building rooftops, say, to vent and recycle the heat free of
charge. GREG BRIENZA: A greenhouse, a pool, a spa,
a community center, something along those lines. PAUL SOLMAN: Mayor Read, the economist, finds
the idea downright intriguing. COLIN READ: Imagine a hothouse tomato indoor
growing facility that’s heated by abundant excess heat from a Bitcoin operation. PAUL SOLMAN: So, Plattsburgh, New York, could
become the model for efficient Bitcoin mining? COLIN READ: Exactly. That’s my goal, to figure out a way to turn
this liability into a huge asset for us and communities all around the world. PAUL SOLMAN: For the “PBS NewsHour,” this
is economics correspondent Paul Solman in Plattsburgh, New York.

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