First a Hum and Then a Bang: Niagara Falls Residents Forced to Reckon With Crypto Mining

NIAGARA FALLS, N.Y. — An explosion and subsequent fire rocked a Blockfusion crypto mining facility in upstate New York last week, resulting in thousands of mining rigs going offline.

About three miles away, another bitcoin mine owned by U.S. Bitcoin Corp. had previously drawn the ire of some residents for being too noisy.

The result: In December, the city of Niagara Falls imposed a 180-day moratorium on new bitcoin mining operations while it works on ordinances to control impact of mining on the local community.

The new laws will likely include zoning requirements to ensure crypto mines aren't too close to residential areas, Niagara Falls Mayor Robert Restaino told CoinDesk in a phone interview on Thursday. "We have what we think is the final draft of the proposed change," the mayor said. As for next steps, he said the draft will go to the city planning board before it goes to the city council for a final vote.

Most residents near the Blockfusion site told CoinDesk they had heard the explosion but weren't too alarmed at the time, and said the resulting fire was put out quickly. Teresa Chapelle, who lives about one-third of a mile away, said she not only heard, but also felt, the explosion inside her home.

At the time she was having dinner with her children in her yard – which has a direct view of the Blockfusion facility about 400 yards away – Marlene Maikranz said the explosion was terrifying to her and her kids, and she rushed them inside to avoid inhaling the fumes. These kinds of explosions, though, were actually a more common occurrence several years ago when the site was still operating as a power plant, she said.

Maikranz posted photos from the incident on her personal Facebook page, which indicate the date of the explosion as May 10.

Blockfusion USA is a New York City-based company, and the mining rigs it hosts at the Niagara Falls site belong to Nasdaq-listed Bit Digital (BTBT), which reported the incident in a filing with the U.S. Securities and Exchange Commission on Thursday.

Bit Digital noted that power was cut off for 2,515 bitcoin miners and 710 ethereum miners, but the explosion and fire didn't seriously damage the machines or the building.

The company placed blame for the explosion with "faulty equipment owned by the power utility," and said it intends – along with Blockfusion – to "pursue claims including seeking reimbursement for lost revenue."

"How this gets resolved between the utility and its customer, I think will be the subject of an awful lot of discussion," Restaino said, adding that the fire department wasn't called for an investigation on the site and simply responded to the incident. The police department wasn't involved, the mayor's office said.

The city's biggest concern, Restaino said, is that such facilities operate in line with local law, particularly with regard to electrical services and permitting. "That's really been the failure on the part of many of these [crypto miners]," he said.

UPDATE (MAY 24, 1:00 p.m.): Clarifies moratorium timeline in third graf.