In a historic regulatory step, New York became the first U.S. state to ban certain types of cryptocurrency mining. Gov. Kathy Hochul signed into law a bill Tuesday triggering an immediate moratorium on “evidence-from-work” cryptocurrency mining powered by fossil fuels. No new permits for such mining operations will be issued for two years, and existing permits will not be renewed to the law (A7389C).
The bill mentions the heavy climate and infrastructure costs from cryptocurrency mining in his reasoning. In addition to the moratorium, the new law requires the New York Department of Environmental Conservation to produce an Environmental Impact Statement that evaluates evidence of the impact of the work statewide within one year, which can then be used to inform the future policy.
Trial-from-work mining uses large networks of computers to generate encrypted blocks on the blockchain. Basically: Computers compete to solve long strings of useless, arbitrary, and increasingly complex mathematical equations that test intent, then tabulate and track transaction data across the network. The end result of all this is that winning miners end up with a chunk of new cryptocurrency at the end, making mining profitable.
Trial-from-the work is aimed at keeping the blockchain decentralized and fraud-free through a an incredibly high cost of participation, and that cost is paid for by energy. Outside the US, European regulators have done this as well taken into account the restrictions and practice bans. Cryptocurrency mining is a huge drainage on the electricity gridand the industry as a whole produces a huge amount of carbon emissions.
“I am signing this legislation into law to build on New York’s Climate Leadership and Community Protection Act, the nation’s most aggressive clean energy and climate law, while also continuing our determined efforts to support economic development and job creation. jobs in upstate New York,” Hochul wrote in a memo shared with Gizmodo, explaining the Governor’s reasoning behind his passage of the law. “I recognize the importance of creating economic opportunity in communities that have been left behind This is why I will continue to invest in economic development projects that create the jobs of the future… while also taking important steps to prioritize the protection of our environment,” he added.
Worth noting: The moratorium still allows crypto traders who rely significantly “proof of stake” with lower energy consumption template. And miners are allowed to continue to operate and build trials of working plants that rely on non-fossil fuel sources such as hydroelectric, nuclear and wind. But even that requires precious green energy, which could be put to more needed, off-the-grid uses.
The newly signed bill passed the state senate in June, but Hochul remained without commitment on it until this week. Pro-crypto lobbyists (And New York mold Eric Adams) pushed hard for the governor to veto the bill, expressing concern that the regulation could stifle business interest in the state and impede the growth of the industry. Crypto advocates also feared that New York’s bill will eventually lead to the passage of similar legislation elsewhere, as New York has a reputation as a trendsetter Democrat, according to a CNBC report which extensively cites industry rumours. But cryptography has already done that a nice job from stuffy itself Over the past a few months.
More recently, the collapse of one of the largest cryptocurrency exchanges, FTX, has sent shockwaves through the blockchain, tanking bitcoin value and leading to other exchanges be downgraded. FTX imploded largely due to poor valuation and bankruptcy of founder and CEO Sam Bankman-Fried probable illegal management of investor funds. And whether or not the courts end up holding SBF accountable for all that missing cash, it’s undeniable that cryptocurrencies are full of scams.
Also worth considering: The cryptocurrency industry provides value to a very small number of people. It’s not exactly a public good. And as Texas has shown, cryptocurrency mining is a major drain on the energy grid, perhaps just as much all Houston families.
New York City has seen an increase in cryptocurrency mining operations in recent years, and in some cases the industry has negatively impacted communities, even regardless of the negatives of the climate. In Plattsburgh, an influx of miners has led to soaring winter energy bills and mass noise disturbances, yielding no local economic benefit, according to a report from MIT Technology Review. “From 2016 to 2018, cryptocurrency mining in New York state increased annual electric bills by approximately $165 million for small businesses and $79 million for individuals,” the article notes.
So, Plattsburg residents are likely heartened by the new regulation along with environmental groups. “This first law in the nation should set the standard for every other state that cryptocurrency miners are entering, extracting resources and wreaking havoc,” said non-profit organization Earthjustice, in a statement. a declaration. “We look forward to the DEC fact finding review, which we are confident will confirm…[that] Cryptocurrency mining is a major threat to climate security and needs to be tightly regulated.”