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Bitcoin miners bring opportunities and challenges to small communities
Eli Dile   on Thursday, April 12, 2018 at 12:00:00 am

Bitcoin, the decentralized digital currency that fluctuates wildly in value, has made a lot of people rich (and led plenty others to financial ruin). After a surge in value, the technological innovation that once existed on the fringes has become mainstream, and now, local and state governments want in on the action.

Kansas, Illinois, New Hampshire, Tennessee, Texas, and Wyoming have passed laws or issued rules that exempt digital currencies from money transmitter licenses. States are not interested so much in the modest job creation that results from bitcoin “mining” but rather in the blockchain technology miners bring with them (Stateline).

Blockchain is a public ledger that records bitcoin transactions on a distributed network, which is (for now) unhackable. Technology watchers believe blockchain can be applied to a whole host of industries, allowing “people to come to contractual agreements without involving banks, courts or lawyers.” Many states are vying to hone a competitive advantage in the new technology to grow their entrepreneurial and technological ecosystems.

As for the miners themselves, their relationships with local governments are complicated. On the plus side, miners are reviving derelict properties by opening in long-shuttered businesses with high electricity capacity. To create new bitcoin, miners use computer servers to solve complex mathematical puzzles. Bitcoin mining is energy-intensive, with large mining operations using stacks and stacks of computer servers and large cooling systems, so miners are attracted to rural areas and small towns where energy and real estate are cheap. Thanks to hydroelectric dams on the Columbia River, towns in eastern Washington have some of the cheapest electricity rates in the country. In 2018, between 15 and 30 percent of all bitcoin mining was done in the Mid-Columbia Basin (Politico).

But intense electricity demand has the potential to overwhelm the grid, leading some governments to put the brakes on the cryptocurrency gold rush. Plattsburgh, New York, became the first U.S. city to ban bitcoin mining. The city council voted unanimously to place an 18-month moratorium on new mining operations after a surge in electricity demand jacked up utility bills for hundreds of households (Vice). Massena, New York, another city blessed with cheap hydropower, lost out on a $600 million investment because of a moratorium the New York Power Authority recently imposed on powering new mining operations (NCPR). Blockchain Industries planned to install a large-scale mining operation on a former Alcoa site that the company claimed would create 500 jobs.

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