But one industry has sprouted, seemingly spontaneously, drawn not by tax incentives or the promise of grants but by the low-cost hydroelectric power that's available in a handful of Northern New York communities.
The reception hasn’t been what one might expect.
“People hate us now,” said Tom Pillsworth, one of the cryptocurrency "miners" who have opened up shop in Plattsburgh, where electricity from the New York Power Authority’s hydroelectric complex along the St. Lawrence Seaway is available for pennies on the dollar.
In fact, Plattsburgh recently imposed a moratorium on new cryptocurrency operations in the city.
“We’re hoping to charge them more,” Plattsburgh Mayor Colin Read said of the miners who are clamoring to bring their high-powered computer server farms to the empty warehouses and factories in the area.
In truth, Plattsburgh residents don’t hate all of the crypto miners, since many are still unaware of the new business. And both Read and Pillsworth said they are working on ways to accommodate the miners in a way that won’t drive up power prices for the rest of the city.
Cryptocurrency miners — often called Bitcoin miners in a nod to the best-known brand of this new virtual money — employ custom-built computers to run sophisticated blockchain algorithms around the clock to produce virtual "coins" that can be sold for cash or used to buy goods and services.
The trouble is, these computers are so power-hungry they consume most of the low-cost power that NYPA sets aside for Plattsburgh.
When those monthly allocations are used up, residents and business then pay a higher spot-market price for electricity.
To get an idea of the difference, Plattsburgh residents pay less than 5 cents per kilowatt/hour for NYPA power while most consumers pay between 10 and 12 cents.
But that cost jumps when the city’s monthly allocation of cheap NYPA power is used up. Residents have grown irate when their electric bills have risen thanks to the cryptocurrency boom.
Adding to the anger is the fact that power has long been so cheap in Plattsburgh and other NYPA-powered communities that many residents heat their homes with electricity rather than gas or oil.
The power consumption has also dinged the remaining old-economy businesses in town such as the Mold Rite plastic bottle cap plant.
Read says the plant, which employs roughly 200 people, saw a $26,000 jump in power costs in January alone.
But crypto miners, even those that have warehouses full of computers, are typically based out of town. And they rarely employ more than a few people to tend the computers, said Read, an economics professor at the State University of New York’s Plattsburgh campus.
“They lease space, bring in the machinery, hire a couple of people to run the machinery — (but) they are caretakers,” Read said of the miners.
Pillsworth, who is a local businessman, has his own operation where he mines cryptocurrency and provides equipment for some other miners.
Plattsburgh is not alone. Nearby Rouses Point has also put in a temporary ban on crypto operations, and other communities including Lake Placid and Tupper Lake are weighing similar actions.
Consuming their low-cost power allocations isn’t the only concern. Tupper Lake Mayor Paul Maroun noted that they need to ensure a degree of fire safety, given the load these operations place on power lines. They also create a lot of heat and noise.
Maroun, Read and others met this month with the state Public Service Commission as well as representatives of Gov. Andrew Cuomo's administration to try and figure out how to deal with this North Country boomlet.
The PSC, which regulates utilities, in March said municipalities could charge higher power rates for cryptocurrency miners.
“If we hadn't acted, existing residential and commercial customers in upstate communities served by a municipal power authority would see sharp increases in their utility bills,” PSC Commissioner John Rhodes said in making that announcement.
Cryptocurrency was developed nearly a decade ago in Japan. It uses blockchain technology — a sort of web-based ledger — so participants can store virtual currency.
While the value of traditional types of currency are set by a combination of economic trends and government actions, the value of the rapidly proliferating species of cryptocurrency are set by the level of activity in the blockchain and the scarcity of a given token.
Miners use their computers to constantly search for and track the commerce these tokens are involved in, and that can result in them earning cryptocurrency that can be traded for cash.
People have been crypto-mining for years, but it burst into the public imagination in recent months when prices skyrocketed.
Bitcoin, the best-known cryptocurrency, jumped from just over $900 to almost $20,000 per unit late last year. It has since fallen to less than half that amount.
Cryptocurrency enthusiasts see it as a way to revolutionize commerce and banking by avoiding the need for a central controlling authority. Blockchains are controlled by the users — in essence, they are crowdsourced.
But critics see the technology-driven marketplace as the latest boom-and-bust scenario in which a few well-funded speculators do well but leave smaller participants behind. As in most volatile markets, speculation runs rampant.
Pillsworth sees former Wall Street denizens as well as mathematicians getting into the business. The math skills are required to develop the algorithms the machines use to ferret out opportunities in this online world.
Not all communities are opposed to crypto-mining. Steven O’Shaughnessy, the supervisor of Massena, says they are welcoming miners who he hopes will fill up an empty aluminum smelter in town.
The town has struggled in recent years as a General Motors power train plant and then one of two huge Alcoa aluminum smelters was closed. Hundreds of well-paying jobs were lost. In the Plattsburgh-Rouses Point area, there used to be a sizable Air Force base as well as a Pfizer pharmaceutical plant.
With just one smelter operating in Massena, O’Shaughnessy figures crypto mining is better than nothing for a Rust Belt town.
Massena acquired long-term NYPA power contracts years ago, when much of upstate was humming with industry.
Not all the cryptocurrency firms wanted to talk about their operations, and some appear to have little more than an Internet presence. Others didn’t return calls.
It’s not even clear how many are in operation. While there are a handful of large outfits with warehouses full of computers coming to Plattsburgh and Massena, Read estimates that several hundred people in his town — including some SUNY students — have quietly started crypto-mining with one or two machines.
In a pinch, a computer with a high-end graphics card can be configured for crypto-mining, he said.
Some of the companies echo O’Shaughnessy’s belief that the new arrivals are better than nothing.
“We create immediate jobs, put significant capital into the local economy, and pay significant taxes to local government coffers,” said a statement from Kyle Carlton, general counsel for CoinMint, which has operations in Plattsburgh and Massena.
Read and Pillsworth say that some of the miners and city officials are starting to brainstorm ways that both can benefit from this new industry.
Pillsworth said he has several mining computers in his home. They throw off enough heat that he has been able to unhook his baseboard radiators.
He’s looking at ways to harness the heat the machines generate on a large scale, such as placing them next to community centers.
And he’s given talks on crypto-mining at SUNY Plattsburgh, where they are looking at developing a course on the topic.
“Some of them are negotiating, trying to be better members of our community,” said Read.
©2018 the Times Union (Albany, N.Y.) Distributed by Tribune Content Agency, LLC.