CRYPTO EMISSIONS

Why a Small Town in Upstate NY Banned Cryptocurrencies

Cryptocurrencies have captured the world by storm with some touting its success as “magic internet money” and others criticizing it as a “bubble waiting to burst”. One thing is for sure: crypto can have a significant impact on the environment, and the small town of Massena, NY, home to the world’s largest crypto data center, has been caught in the crossfires going so far as to ban them temporarily.

By Jeremy Zimmerman

October 22, 2021

Gary Stevens

Crypto Background

But before we discuss how a sleepy town in upstate New York became at the center of the latest disputes over crypto, it’s important to understand how it works and how we got here. Modern cryptocurrencies can be traced back to the 1990’s but it was BitCoin in 2009 that revolutionized the field with its blockchain technology. BitCoin’s use of blockchain shifted away from a centralized banking system and instead became peer-to-peer verified. This new type of peer-to-peer verification is secure and is only possible because blockchain uses a Proof of Work consensus to verify the transactions legitimacy. As a result, the work is done one each individual’s machine or server spread out all over the world instead of at some central server which can be monitored or controlled by a central authority. 

All of this technical jargon can certainly be intimidating, but it is important to understand that crypto transfers the power from centralized banks to individuals. This transfer of power is why crypto currencies are sometimes seen as great equalizers as theoretically anyone in the world can take part despite their nationality, sex, location, criminal history, etc so long as they have a server. 

At first glance, it appears to be a wonderful way to give power back to the people but quickly it can become a huge problem for local communities. See, when BitCoin started it was relatively easy to verify transactions or “mine” BitCoin but as time has gone on and the value has skyrocketed the amount of work to verify a meaningful amount of bitcoin has also skyrocketed. And just as the “cloud” has a physical footprint left on the environment, so too do these “crypto mines” and it's a rather significant one.

Crypto’s Carbon Footprint

Research done at Cambridge highlights the impact of cryptocurrencies on the global environment. Bitcoin alone, uses more power than the entire countries of Finland and Belgium and uses more electricity than all of the lights in the United States. While these stats highlight the significance of crypto’s impact it is important to highlight that on a global scale they still pale in comparison to power giants like China and the United States. Crypto’s threat isn't, at this point, a global environmental issue but rather a local one which can greatly alter a local community. These localized effects are serious because crypto mining tends to group in similar areas with cheap electricity, and small Massena in upstate New York with ample amounts of cheap hydroelectricity became a new hive for crypto miners.

Why Massena?

With a population of only 12,000 residents, Massena faces significant threats from an inondation of crypto miners. This threat is highlighted by pre-existing economic disparities in the region with a poverty rate more than double the national average and a higher unemployment rate. The town is also home to a significant Mohawk (Kanienʼkeháka) minority who have historically been impoverished and discriminated against in the region. These two factors together make Messina an area prone to threats of environmental injustice and exploitation. The most evident being threats to Massena’s cheap electricity rates which would significantly increase the average family’s household budget aggravating poverty in the region. 

But these servers do more than just use electricity, they have a physical impact on the environment. Oftentimes these servers are stored in shipping containers which have popped up across the town plighting the land both aesthetically and destroying the natural environment and lands held sacred by the native Kanienʼkeháka. Furthermore, once the “mine dries up” and electricity prices become too high these servers are often left as e-waste for the local community to deal with, leaving Massena with a destroyed environment and inflated electricity costs with minimal economic benefit. As a result, Massena has temporarily banned cryptocurrencies while it attempts to find a way to regulate them. 

Massena is not alone in this issue, with nearby Plattsburgh, NY doing a similar ban and regulation in 2018 creating a patchwork of cryptocurrency regulations across towns in upstate NY and other areas with cheap electricity as attempts to create a statewide ban failed. While this patchwork can help these local communities in the short term, it does little to alleviate the underlying pollution that comes from crypto. And since crypto has no centralized oversight, it is flexible and can, and has, moved from town to town in order to find the cheapest rates and the friendliest regulations. Until there is some comprehensive regulation over the environmental degradation from cryptocurrencies, towns will continue to be taken advantage of by eager crypto capitalists. 

Closing Remarks

The need for regulation of cryptocurrencies demonstrates a fundamental problem with a decentralized currency which is based upon the notion of peer-to-peer verification vis-à-vis environmental protection. The cryptocurrency issue highlights why environmental regulation is still so essential and falls under a greater umbrella of the need for broader regulation of the digital space. While the independence of the internet is an essential part of its beauty, regulation and oversight are essential to protect the people who are unintentionally caught in the environmental fallout.

Jeremy Zimmerman has recently finished a dual degree program between Sciences Po Paris and Columbia University. At Columbia he studied Sustainable Development and focused especially on environmental justice and policy. Recently he has worked for the Center of Resilient Cities and Landscapes focusing on mapping the impacts of last-mile deliveries from Amazon, UPS, and other e-commerce centers in Brooklyn. He is passionate about keeping the internet a fair place and believes it can be used as a vehicle to help better justice, equality, and the environment. He is fluent in English, French, and American Sign Language and in his free times loves playing video games and going on hikes.