NY State Village, Plattsburgh, Becomes the First Town to Ban Bitcoin Mining
Plattsburgh, a city in upstate New York, has been a hotbed of Bitcoin mining activity because of its access to low cost electricity. The profitability of Bitcoin mining is largely a function of electricity costs. Plattsburgh has one of the lowest electricity rates in the United States. The country-wide average rate is 10 cents per kilowatt-hour. In Plattsburgh, residents pay 4.5 cents and industrial enterprises pay only 2 cents. The cryptocurrency miners came to exploit these low prices.
Electricity is very cheap because of Plattsburgh’s proximity to generating stations on the St. Lawrence river. But, the Bitcoin miners in town have used up all of Plattsburgh’s allotted power and have forced the town to start buying additional electricity from the open market, at high prices. For residents this has meant surges in monthly electricity bills. Some residents have paid of as much as $300 more per month than usual for electricity.
In response, city officials in Plattsburgh have put an 18-month moratorium on cryptocurrency mining (Bitcoin or otherwise). This is the first town to do this, and with the price of Bitcoin dropping it may be the last for some time. But, this ban highlights one problem with bitcoin, maintaining the blockchain uses a ton of energy.
SEC has Dozens of Crypto Investigations Underway
On March 15, Stephanie Avakian, co-director of the SEC’s Enforcement Division, indicated that the SEC has dozens of investigations open in the cryptocurrency space. The SEC sent subpoenas to firms it thought had broken securities laws through involvement with ICOs (initial coin offerings). Avakian further indicated that she expected to see more and more investigations, saying “We are very active, and I would just expect to see more and more.” The SEC has already brought more than half a dozen cryptocurrency related actions since September 2017.
To provide some limited guidance to purchasers and promoters of ICOs, the SEC is operating a webpage on the topic. On this site the SEC has indicated that ICOs can be securities and they warn promoters to be cautious.
Overstock Stock Plunges as Company is Subjected to Crypto Probe by SEC
Even larger, more reputable companies have not been above the SEC crypto melee. The shares of Overstock plunged 16 percent after Overstock stated that a SEC probe might hurt its business and delay its ICO. On March 15, the company said, “the investigation could result in a delay of the tZero security token offering, negative publicity for tZero or us, and may have a material adverse effect on us or on the current and future business ventures of tZero.”
Cryptocurrencies Fall Amid Global Regulatory Uncertainty
Bitcoin was trading at $7541.22, Ethereum at $497.21 and Ripple at $0.58 at 2:24PM on 3/18/18. Regulatory concerns continue to weigh on the cryptocurrency markets. Japan’s Financial Services Agency is thought to be punishing several crypto exchanges. Simultaneously, the SEC is suggesting it may require digital assets to be registered with the agency. Both pieces of regulatory news have served to intensify the downward momentum felt in the market.