Bitcoin.. The cryptocurrency.. For most of us, It's just another one of those crazy schemes to make money that billionaire investor Warren Buffett advised would, "come to a bad end." One of those bad ends may be happening now, and it could impact the power supply -- for all of us.
Plattsburgh, New York, a small city near the Canadian border, is an unexpected hub for a high-tech business most people don’t even understand. It’s not out in the open, but tucked off the beaten path -- in a former paper mill. It's a bitcoin mine.
Thomas Pillsworth: The more machines you’re running, the more data you’re processing, the more reward you get.
Thomas Pillsworth started studying bitcoin in 2012. Now, he stockpiles the mines..and hosts them for big investors. What’s going on is a race to manage online money. Each of these devices is tracking the exchange of bitcoin through complex math, so that a bitcoin can’t be spent twice. So.. in essence, miners are getting paid for their work as auditors.
Thomas Pillsworth: The only reason somebody would invest $2,000 in a bitcoin miner and keep it on 24 hours a day, 365 days a year, they’re not doing it because someone’s going to pat them on the back. You get rewarded with a little bit of bitcoin each time.
All that work needs a lot of power. And that may be straining our global supply. This week, an index that tracks crypto-currency shows the bitcoin network uses the about same amount of energy as the country of Austria...with one transaction using the same energy it would take to power 28 US homes for a day. Operators zoned in on Plattsburgh - For one simple reason.
Thomas Pillsworth: Plattsburgh has some of the lowest if not the lowest electricity costs in the United States.
Plattsburgh struck a deal for cheap hydro-power back in the 1950s. The cheap prices lingered..and miners took notice--- seizing on Plattsburgh’s power. Within months, residents say their bills surged. Mayor Colin Read felt the immediate impact.
Joce: What did you hear from residents when they first started to see this difference on their power bills?
Mayor Read: It was an outcry. Bills are going up 30 or 40 percent. So when those 150 dollar bills start rising to 200 or 225 bills, certainly bitcoin is a very big part of those increases.
The Mayor instituted the first moratorium on bitcoin mining in the US - 18 months - no new mines until the city could do more research.
Mayor Read: We don’t necessarily object to somebody buying our electricity, but we view it as a fixed resource. We only have a certain amount to sell and we’d like to generate as much bang for the buck as we possibly can for our community.
Communities around the world are navigating the crypto-currency surge. Washington state saw a mining boom until last spring, when a key county also imposed a moratorium on new mines after reviewing their impact on utility operations. China’s government has begun shutting down some of its massive mines, citing electricity use as one of the reasons. But ...where there are mines...there is money. In the tiny former Soviet state of Georgia - one American based company - Bitfury - reportedly generated more than 90 million dollars in revenue last year.
Thomas Pillsworth: The whole world infrastructure is changing because of this. It’s so narrow minded to just look at bitcoin at this point because once you get under the hood and realize what’s going on, it’s revolutionizing the whole world.
The challenge for cities is that these bitcoin miners move around... as they look for cheap power. So if a city institutes a moratorium, or kicks them out, they just move to the next place.