PLATTSBURGH — Ryan Brienza says it's not a good time to be a cryptocurrency miner.
The value of Bitcoin has been on a steady decline since the City of Plattsburgh adopted its 18-month moratorium on any new or expanding cryptocurrency-mining operations in March 2018, said the CEO of Zafra LLC.
Around that time, the digital currency was valued somewhere around $10,000 per Bitcoin, the CEO added.
"Right now, it's trading around $3,400," he said in a recent interview. "It's a pretty substantial drop."
As of Wednesday, one Bitcoin was worth $3,921.19, according to coindesk.com.
The city's moratorium also blocked existing cryptocurrency hosting services, including Brienza's, from growing.
"We had a tremendous demand at the start, but once the moratorium hit, it prohibited us from expanding, which is what we need to do to bring in more business and revenue," said the 19-year-old entrepreneur.
"We're not going to fall under, and that's what I'm trying to keep us from doing. A lot of other companies around the world have fallen under — they've gone bankrupt.
"I'm getting a bit anxious and just hoping that the moratorium will get lifted."
'DON'T REALLY CARE'
Municipal Lighting Department Manager Bill Treacy told the Common Council at a recent committee meeting that some cryptocurrency miners see the city as nothing more than a cheap source of power.
"They don't really care about the community whatsoever," he said. "They have told me they don't care if they go bankrupt or anything else. They just want the resources so that they can make their money and walk away."
The MLD manager said the municipality's largest cryptocurrency-mining operation uses about 11.5 megawatts, while other kinds of companies in the city, such as Bombardier Transportation, uses only a fraction of that.
"You could probably count on one hand the number of people (the cryptocurrency miners) have working for them," Treacy said. "They're renting. They're not paying property tax."
Meanwhile, he added, Bombardier employs some 400 to 600 workers, while also paying property tax and "everything else."
"If we've got a whole flock of these (miners), and let's say it takes up 30, 40, 50 megawatts, you don't have cheap power any more," he said. "You have more expensive power."
WHAT'S THE PAYBACK?
But Mayor Colin Read thinks that, to most miners, the city isn't as desirable as it once was.
Although the municipality still has the cheap electric rates that first attracted cryptocurrency miners back in 2016, Read believes Local Law P-7 of 2018: Providing Zoning Regulations for Commercial Cryptocurrency Mining Operations in the City of Plattsburgh will be a deterrent.
The city adopted that law in October 2018 to restrict and regulate some aspects of mining operations, including electrical safety, high-heat levels, worker heat and ventilation and noise.
"The question is, if you lifted the moratorium, would we be lifting the floodgates to (miners) coming? We actually don't think so," Read said in reference to an earlier discussion he had with Treacy and City Councilor Patrick McFarlin (I-Ward 5).
Still, City Councilor Rachelle Armstrong (D-Ward 1) wondered about the value of the virtual-mining operations and their effects on the city.
"From the very beginning the point was made, I thought quite forcefully, about the payback to the community," she said. "What payback does Plattsburgh get for allowing this industry to expand?"
PRETTY SWEET SYSTEM
Brienza told the Press-Republican that Zafra LLC has a lot to offer the municipality.
He agreed with the mayor, that the city isn't as attractive to cryptocurrency miners, particularly because of the requirement for heat regeneration.
"You have to invest a lot of time and money into figuring out how to do that," he said.
The local law says: "No more than 20 percent of the heat dissipated by the mining activity shall be released directly to the outside when the average daily temperature is less than 40 degrees."
But Brienza said his company has the answer to that — the BitBox; he said that device invented by his company can capture the heat radiated by cryptocurrency-mining devices.
"And, in return, can exhaust it into a building that needs (to be heated)," Brienza said. "Then, when the heat is not needed, the box just simply exhausts it all outside.
"It's all automatic. It's actually a pretty sweet system we've developed."
Brienza said his company would cover the engineering and installing costs in order to heat city buildings, such as the Crete Memorial Civic Center on Beach Road.
"I'm a resident, and I'm looking to bring a benefit to the city," he said.
THE ISSUE OF NOISE
The council's potential noise regulations would be a non-issue for Zafra LLC as well, Brienza said.
The current law says noise levels for cryptocurrency-mining operations cannot exceed 90 decibels at a distance of 25 feet from the containment structure's exterior.
But City Councilor Jeff Moore (R-Ward 5) has been researching ways to further this law, including taking a look at preexisting noise ordinances of other municipalities.
"You have to monitor the noise level at two different locations," he explained at the recent MLD meeting. "At the actual facility is one level.
"At the property owner's house, it has to be a certain other level."
Brienza doesn't know Zafra LLC's exact noise level, but said any noise heard outside of the facility is from the exhaust fans that are used to cool down the mining machines.
To meet any future sound regulations, he said, his company would transition to liquid cooling.
"We'd be using water to cool the miners, or at least that's what our BitBox would be using," he said. "That cools down the miners instead of just using exhaust fans."
Cryptocurrency-mining operations have yet another obstacle in the city: Rider A.
The New York State Public Service Commission imposed that new tariff structure to make mining operators financially responsible for their high-power usage.
If the operations tip the city over its cap of inexpensive hydropower energy, they will be charged for the more costly supplemental power.
The city had to buy the pricey power in December, and cryptocurrency miners should see a bill increase in either this month or in March, Treacy said.
Brienza said he was nervous to see what his bill would be.
"It's nothing that we can gauge," he said.
Once the ban is lifted, Zafra LLC plans to market its inventions.
"We are looking to expand on and create some jobs associated just with building these products to sell to other companies around the country and world," Brienza said.
"We haven't had any means to build these out at the moment because we don't have anywhere to showcase them."
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