Almost every major city around the world is famous for something unique. Las Vegas is synonymous with casinos and nightclubs. Rio is famous for its beaches and world-class hotels. Paris is called the city of love for a reason.
For two Washington cities, Ephrata and East Wenatchee, bitcoin mining has had a massive impact. Wenatchee has fully embraced crypto mining and is almost on the verge of becoming the epicenter of crypto mining in the US. On the other hand, Ephrata has had enough of crypto mining. Local authorities have imposed a one-year long ban on bitcoin mining.
So, why the love-hate relationship between bitcoin miners and cities?
The allure of Cheap Power
Thanks to a slew of dams located near the Columbia River, electricity is cheap in Seattle. In Wenatchee and Ephrata, it costs as low as two cents for a kilowatt hour. By contrast, the national average is ten cents.
Bitcoin miners constantly look for cities with the cheapest power to cut costs on the power guzzling business. China used to be the best place for miners. But the country banned crypto mining last year. Canada was the next best destination but few provinces have lower power rates than Seattle.
To put it into perspective, it costs 200+ kilowatt hours to mine one bitcoin. With the cryptocurrency’s prices dwindling this year, miners have been shifting bases regularly to find cheap power. Wenatchee’s low power costs and a supportive local government have been encouraging miners to move there. Learn all about it in this Bitcoin infographic.
Cheap Internet and Cool Temperatures
Besides cheap electricity, the availability of affordable Internet and cool temperatures are factors that influence bitcoin miners. Bitcoin mining machines produce a lot of heat in the process of mining. They also must be connected to the Internet 24/7 to transmit and receive data from the bitcoin blockchain.
So, when a city like Wenatchee has cheap power, cool temperatures, and the cheap Internet, it’s great news to miners. Miners spend less on power if their mining machines and cool naturally. If the power is also inexpensive, that’s more money saved.
Although bitcoin miners are small in size, finding a location to place them is the hard trick. Lack of affordable land is a huge reason why miners have been avoiding major cities like New York. Even in China when mining was legal, miners had to move into the rural areas to find cheap land.
East Wenatchee has been largely a great destination because finding land is easy. Many investors moving to the Washington-based city are large investors. They need a few acres of land to build storage warehouses for their miners. Large investors install hundreds of miners at the same location, which is why the availability of cheap land is crucial to miners.
Where land is a problem, investors go for abandoned businesses. An old factory, an abandoned parking lot or anywhere with room to install miner is substantial to investors. Of course, many bitcoin mining businesses are backed by VC firms and out of state investors. So, the moment land was available in Washington and other areas, they just wrote their checkbooks.
Upscale of Job Opportunities
One reason cities like East Wenatchee are welcoming miners is that they bring jobs. A medium-sized mining business can employ up to 20 people. Ten businesses setting up bases in the same city means more than 200 people get employed.
Along with job growth is infrastructural development spurred by miners. Where mining businesses have been established, new industries are also coming up. Restaurants, bars, and grocery shops have increased in Ephrata since the city became a mining hub.
Excessive Power Consumption
Inasmuch as bitcoin mining adds jobs to cities, it consumes a lot of power. A 2016 study by digiconomist.net showed that bitcoin consumes 0.01% of all electricity in the world. Locally, towns and cities are getting concerned about the impact of bitcoin mining to power costs.
In March this year, the New York City of Plattsburgh became the first city in the US to temporarily ban BTC mining. The city’s reason was simple. Before companies started flocking the area to mine bitcoin, power cost 4.5 cents per kilowatt-hour. By early January this year, are residents had to pay 10 cents or more for the same electricity.
Plattsburgh is allotted 104 megawatts of power every month by the New York State government. When bitcoin mining flocked the city, Plattsburgh exceeded its allotment and had to purchase power in neighboring cities.
A growing number of cities have imposed bans on bitcoin mining for hogging power. Despite welcoming mining businesses, the city East Wenatchee is also considering burning residential bitcoin mining. A series of fire line burns and electrical short circuits in homes is being attributed to bitcoin mining. Ephrata’s a-year ban on mining is also related to power consumption issues and also because residents complained about noisy bitcoin miners.
Strict Crypto Regulations
As it has become clear, many cities want the jobs that come with bitcoin mining. But few of them are ready to support the huge electricity demands. In the US, many cities have denied having any intentions to band bitcoin mining completely. In fact, the trend throughout the country has been to place temporary bans instead of total bans.
The bitcoin industry is credited for spurring economic growth everywhere it has been embraced. Cities like East Wenatchee are witnesses. But with the industry coming at a cost of power guzzling, cities are divided on how to approach it.
Some cities downplay the impact of bitcoin mining. Before banning mining in Plattsburgh, the city’s mayor complained to the New York Times that most mining businesses employed less than ten people. The mayor, however, noted that the few jobs were better than none.
Forward-thinking governments have been finding ways around the electricity consumption problem. Some cities want to ignore the economic development boosted by bitcoin mining entirely. In reality, the bitcoin industry has had more benefits than disadvantages.
Some cities like Wenatchee have recorded massive growth rates since bitcoin mining began growing. Direct employment average 100 people per year. Investments from related industries have also grown.