
Bitcoin Miners Flock to New York’s Remote Corners, but Get Chilly Reception - UpshotKnothole
https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-new-york-electricity.html
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DINKDINK
>Mr. Recny asked why an enterprise that required only a few people to run it
should be able to drive up the operating costs of a company that employed
about 500.

Why should an enterprise that requires only about 500 people to run it be able
to drive up the operating costs of a company that employed about 2,000? and
other such logic from "the only justified subsidy is my subsidy" camp.

>The concerns are part of a broader battle over the enormous carbon footprint
of Bitcoin mining, which on a global scale uses as much energy as a medium-
sized country.

>But the iconic American corporations that abandoned plants in Massena left
behind the precious resource that drew them here in the first place: abundant,
cheap electricity flowing from a dam in the St. Lawrence River.

So the source of the power a hydroelectric dam. That's about as low of GHG per
kWh as you're going to get. "Ce qu'on voit et ce qu'on ne voit pas". If they
ban these miners, like was done in some Canadian provinces, they'll
potentially move to an area with higher GHG per kWh. Since mining is more
location agnostic than other production services, it's natural that it be
located in economically remote but low-GHG, power/energy rich locations.

~~~
badge
The real irony here is that the Bitcoin/Ethereum miners are setting up
hardware which runs software designed to maximize inefficiency for the sake of
maintaining a system designed for money laundering and tax evasion.

Rather than use their equipment for work that's useful to humanity like
Folding@Home or BOINC these mining operations are running what amounts to a
foundry of space heaters trying to compute a lottery number in return for
poker chips at a speculative casino.

~~~
ENGNR
There’s a real need for a currency that’s actually backed by something real,
given the amount of silly money sloshing around the system these days

Linking a currency to wasted energy isn’t great, but what solution would you
put forward? A few countries out there have tried to go back to gold or use
their oil but it doesn’t end well for them

~~~
Retric
> backed by something real

Which is why USD backed up by the worlds strongest economy are used for vastly
more international transactions than all cripto coins combined. Coins have
nothing but belief in their value backing them up and are thus extremely
unstable.

At the end of the day people need to pay taxes and debts and that’s what gives
nation states currency value. As long as the nation does not go on a long term
printing spree things stabilize.

~~~
darawk
> Which is why USD backed up by the worlds strongest economy are used for
> vastly more international transactions than all cripto coins combined.

In what sense do you believe USD to be 'backed' by the US economy?

~~~
Retric
Economic transactions create a tax debt which creates demand for currency to
pay the government. Sell stock, car, or some Twinkies, even in a different
currency, and they get a cut.

Indirectly, messing with your currency risks economic harm creating a huge
incentive for governments not to do that while things are going well.

~~~
darawk
> Economic transactions create a tax debt which creates demand for currency to
> pay the government. Sell stock, car, or some Twinkies, even in a different
> currency, and they get a cut.

That is absolutely correct. But nowhere does it demand that you conduct these
transactions in USD. USD ends up getting used because it's convenient, which
is because people have to pay their tax debts at the end of the year. However,
that is a problem that can be trivially solved by software now, especially as
society becomes more and more cashless.

As long as the US government accepts payment for taxes in USD, there will
always be some demand for it. However, there is nothing actually stopping
people from using other currencies for their normal transactions, which would
substantially decrease demand for USD, and thereby reduce its value.

There is no sense in which the US government 'backs' dollars, except insofar
as they are incentivized not to do anything to actively destroy them.

~~~
Retric
The need to pay US taxes in USD is not a software problem it’s a risk
mitigation problem. If you accept pesos/whatever for your car and the peso
crashed you might owe more in taxes than you where paid _and_ even if you do
the transaction today you still need to buy some USD with pesos to put aside
for taxes.

So, if by ‘some’ you mean multiple trillions of dollars of demand every year
then ok. But, that’s rather trivializes what a trillion dollars means.

Which is why I am saying the economy backs the USD not the government.

~~~
darawk
> The need to pay US taxes in USD is not a software problem it’s a risk
> mitigation problem. If you accept pesos/whatever for your car and the peso
> crashed you might owe more in taxes than you where paid and even if you do
> the transaction today you still need to buy some USD with pesos to put aside
> for taxes.

True, though that's simple enough to hedge.

> So, if by ‘some’ you mean multiple trillions of dollars of demand every year
> then ok. But, that’s rather trivializes what a trillion dollars means.

Absolute numbers don't matter, relative ones do. The demand may go to
trillions, but that would be down from tens of trillions.

~~~
Retric
Absolute numbers create bounds. USD can’t drop to 1/100th of it’s current
value without huge shifts as people would need to pay 100x as many USD in
taxes driving up demand for USD. Now, their is slack in the system, but that’s
a good thing as it provides price signals and feedback loops.

Even record setting sustained inflation of say 2% per month in the middle of
some horrific economic issues would still be a bastion of stability relative
to many currency’s throughout history. So, as long as the economy stays steady
and the USG does not do something monumentally stupid the US economy really
does back the USD.

------
tjpaudio
I fully understand this reaction. Crypo is delivering on none of it's promises
and leaving an ugly mark on the production side. Transactions are way too slow
for retail, decentralization is a joke because the largest mining pools are
manipulating the supply with less transparency than national currencies, the
value is too volatile to entice people to use it for anything other than
speculation, and it is literally the most environmentally destructive modern
technology at the moment. If miners moved into my town you bet my ass I would
be at town hall telling them to fuck off.

~~~
nil_pointer
If your area has cheap electricity, chances are miners are already there.

------
thanatos_dem
“all seeking to capitalize on the soaring value of digital currencies, like
Bitcoin”

Given the trend the last few months, I’m not sure “soaring” is the adjective
I’d choose...

~~~
fake-name
It's soaring, just in a ballistic arc.

------
ilamont
This area of Northern New York is very economically depressed, and it's
interesting to see some of the businesses that set up shop there, or set up
their supply chains to draw from that region. They often promise lots of jobs,
but few deliver.

Chobani was one of the few that has helped the economy (through support for
the local dairy industry, see [https://magicvalley.com/news/local/chobani-not-
a-windfall-fo...](https://magicvalley.com/news/local/chobani-not-a-windfall-
for-new-york-dairymen/article_28076a32-b2c1-11e1-abba-0019bb2963f4.html)) but
others such as the large-scale wind farms across the region use hundreds of
workers from elsewhere to build and maintain the turbines, and don't have many
permanent local jobs ([http://northcountrynow.com/news/hopkinton-wind-
advisory-boar...](http://northcountrynow.com/news/hopkinton-wind-advisory-
board-wont-expand-areas-where-generators-can-be-built-0196294))

The New York Times should have dug into the claims from the Bitcoin miners
about job creation ("Coinmint told state officials it would eventually employ
150 people in Massena") as it looks like (based on the descriptions of
Coinmint's existing ops) there are only a few people needed to manage what
they already have, they are not committing to any large-scale building
projects, and much of the mining gear is imported.

Local news orgs have more reporting about the bitcoin miners and the impact on
the region:

[http://northcountrynow.com/business/blockchain-industries-
pu...](http://northcountrynow.com/business/blockchain-industries-pulling-out-
massena-nypa-moratorium-puts-coinmint-plans-jeopardy)

[http://www.northcountrynow.com/letters/snake-oil-alert-
block...](http://www.northcountrynow.com/letters/snake-oil-alert-blockchain-
industries-says-massena-resident-0230614)

Incidentally, this area is quite beautiful and cheap to live and run a
business in. In many of these small cities you can buy a really nice house for
$100,000-$200,000. It's about two hours south of Ottawa, a bit further to
Montreal and Syracuse, and includes the northern part of the Adirondacks as
well as the St. Lawrence River, Lake Ontario, and Lake Champlain region. The
college town of St. Lawrence University is Canton, located in St. Lawrence
county, and there are state colleges in Potsdam and Plattsburgh. A few cities
have set up economic development zones and incentives for companies to
relocate there including Ogdensburg, which sits next to one of the bridges to
Canada, and I believe Watertown NY, as well.

~~~
drharby
I grew up in that neck of the woods. Drove through aroumd 2012. It very much
is economically depressed but not THAT depressed. It feels just, cozy and
small townish.

Lovely piece of Americana, imo

------
eudora
Is there any work being done to make Bitcoin not consume all that energy?

It's hard to support when it's so wasteful of a critical resource.

Are they trying to go proof of stake?

~~~
plankers
Bitcoin is _not_ trying to go proof of stake because proof of work is the most
secure consensus algorithm that exists. Proof of stake has some lingering
unsolved problems, search for "nothing at stake problem" and "long range
attack."

All the energy consumed by bitcoin is a feature, not a bug. The only way to
defeat the immutability of the bitcoin blockchain and do naughty things would
be to expend _more_ energy than is currently being used (or create a more
effecient miner, mass produce it, set up mining farms, all without anybody
finding out).

~~~
eudora
If that's the case, I'm not into it. It's not sustainable. What an incredible
waste of resources.

And presumably the energy cost correlates to the usage of the currency?

How can it possibly become anything like widely used if it's so pricey?

(Come to think of it, one way is the lightning network. Which doesn't use the
blockchain for almost everything:
[https://lightning.network/](https://lightning.network/))

~~~
plankers
So by your metric the global banking industry, which uses several orders of
magnitude more electricity than the bitcoin network, also isn't sustainable.

A single bitcoin may be pricey, but fortunately there are eight decimal places
after that first coin, enabling users to spend however much or however little
they want.

You're right about the lightning network, it stands to revolutionize the
bitcoin network by providing an instantaneous zero-confirmation payment layer
on top of the bitcoin blockchain. Critically, though, it wouldn't work at all
without the security provided by all that "wasted" electricity. Think of the
lightning network like the HTTP protocol layer resting on top of the TCP/IP
communication layer. HTTP wouldn't work without TCP/IP and TCP/IP wouldn't be
nearly as useful without the myriad of protocol layers which it enables. This
is still early times for bitcoin, and you ain't seen nothin' yet.

~~~
eudora
The global banking system is used by drastically more people than Bitcoin.

And I expect the transactions per person of the global banking system is
orders of magnitude higher.

Energy use per transaction for Bitcoin seems much, much higher, but I don't
have numbers obviously.

But hopefully lightning helps.

------
plankers
Love watching people cry about bitcoin miners increasing the overall efficacy
of electricity use.

If you didn't want people moving in and using your cheap electricity, you
shouldn't have made it so cheap! Price stabilization in action.

~~~
eli
If you walked into Starbucks every day and took most of the sugar packets so
that they're aren't enough for all the other customers, proclaiming "they
should've charged $0.10 each!" when caught would probably not earn you much
sympathy from the regular customers.

~~~
plankers
That would be a good analogy if there were government price controls on sugar
packets at Starbucks. Or if electricity was free. As it stands, it's a pretty
poor analogy.

