New York Partially Bans Crypto Mining on Fossil Fuels
The New York Governor has signed a moratorium on crypto mining operations dependent on carbon-based energy in New York. Mining companies engaged in proof-of-work mining in the state will not be able to expand or renew their permits for the next two years as a result of the ban, which is likely to have consequences for the industry across the United States.
‘First of Its Kind’ Mining Moratorium
New York Governor Kathy Hochul signed a law on Tuesday partially
banning cryptocurrency mining using power generated from fossil fuels. The
legislation will prevent companies involved in proof-of-work (PoW) mining that does not use
renewable energy such as hydropower from expanding, renewing, or obtaining new
permits in the next two years.
The bill introducing the temporary restrictions was passed by the state assembly and senate last spring. The bill targets
proof-of-work (PoW) mining to validate blockchain transactions for
cryptocurrencies like bitcoin, as it requires significant amounts of
electricity to run the powerful computing hardware.
The New York Governor has indicated that the decision "is the first of its kind in the country." Bloomberg reported that the Governor has been postponing the signing of the mining law amid intensive lobbying from the sector. The Governor emphasized her intention to "ensure that New York continues to be the center of financial innovation" while prioritizing environmental protection.
Industry Apprehensive of Domino Effect
Representatives of the industry fear that the ban could have a
domino effect across the US, which is a major player in the crypto mining
market. The Cambridge Bitcoin Electricity Consumption Index has disclosed that
the nation's share of the average monthly global hashrate neared 38% in January. The
Chamber of Digital Commerce issued a warning note:
"The approval will set a dangerous precedent in determining
who may or may not use power in New York State."
The law would weaken New York’s economy and stifle its future as
a leader in technology and global financial services said the Chamber’s founder
and chief executive, Perianne Boring. The chief executive had earlier indicated
that the decision would eliminate jobs and "disenfranchise financial
access to the many underbanked populations."
Experts think that the moratorium could force crypto mining
companies to relocate to more favorable jurisdictions such as Georgia, North
Carolina, North Dakota, and Wyoming, with jobs and tax money moving out of New
York. Texas could emerge as a favorable destination with friendly regulations
and access to abundant renewable power. Texas also offers excess energy from
sources like stranded gas.
Aggressive carbon-reduction targets were responsible for the
government crackdown on crypto mining in China last year. Advocates of the idea
to ban PoW mining in Europe added provisions prohibiting services for
cryptocurrencies dependent on energy-intensive mining to the EU’s Markets in
Crypto Assets (MiCA) legislation. Amid limited energy supplies from Russia in
October, Brussels renewed efforts to reduce power consumption in crypto mining.
Would other states in the US emulate the New York ban? Please
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