The state of New York puts the brakes on crypto mining

Cryptocurrency monitors are waiting to see if New York Governor Kathy Hochul will sign a bill that would impose a two-year moratorium on setting up or renewing licenses for fossil-fuel-powered crypto-mining.

The bill, which was passed by the state legislature on June 2, requires a two-year break for approval of applications and renewal of permits for carbon-fueled electricity plants built for mining in cryptocurrencies that use authentication with proof of work. to validate blockchain transactions.

“The continued and expanded operation of cryptocurrency mining that runs proof-of-work authentication methods to validate blockchain transactions will greatly increase the amount of energy consumption in the state of New York, and affect compliance with the Climate Leadership and Community Protection Act,” the bill says.

The bill also requires a generic environmental impact statement that addresses the extent of cryptocurrency mining in the state, expected industrial expansion, the amount and sources of electricity these facilities use, as well as greenhouse gas emissions and pollutants attributable to crypto mining. It also requires data on the amount of water used, ecological consequences of cooling water and potential health effects due to reduced air and water quality in nearby communities, as well as social and economic costs and benefits.

A new bill for the governor also requires more reflection. It will establish a working group on cryptocurrency and blockchain that will report to the governor and legislator with “legislative and regulatory recommendations, if any, to increase transparency and security, improve consumer protection and address the long-term impact of using cryptocurrency.”

The proposed break in mining comes at a time when the value of Bitcoin and other cryptocurrencies fluctuates sharply, and environmental considerations are moving in the center.

In the state of New York, cheap power and electricity transmission infrastructure from abandoned industrial sites has attracted cryptocurrency mining companies. These companies urge Hochul to veto the bill, which calls for a two-year hiatus, and say it will stifle the state’s nascent mining industry, encourage companies to locate in more crypto-friendly states and possibly create similar legislation in other states.

Those who support the bill see the two-year break as a way to ensure that the state can achieve its goal of reaching net zero by 2050 and a chance to understand what could be a transformative technology before jumping in.

Versions of the debate in New York are taking place in several states. In Texas, it seems that Bitcoin supporters have a higher voice.

Proponents of crypto in Texas, for example, are working to make the state the world’s Bitcoin capital. In addition to cheap power and a deregulated and diversifying power market, lawmakers have created a crypto-friendly business environment, thanks to their willingness to “negotiate ‘amazing’ prices for the power-intensive activity, according to Dallas Morning News. Banks chartered in Texas offer deposit or deposit services for virtual currencies – a positive signal for institutional investors.

Proponents of crypto mining in Texas say that Bitcoin miners are energy customers who can help balance the power needs of the grid by limiting operations when the energy needs of consumers become too high. Natural gas companies that would normally flare up of excess fuel can use that energy to mine cryptocurrency and cut the carbon footprint, they suggest.

Plus, Bitcoin mining “provides a natural free market incentive for the development of more wind and sun in West Texas,” Lee Bratcher, president and founder of the Texas Blockchain Council, said in a YouTube video in January.

Some U.S. senators are also calling for crypto-miners to use zero carbon energy sources and improve their transparency around the industry’s carbon footprint.

In a letter June 14 to Alondra Nelson at the Office of Science and Technology Policy, Senator Sheldon Whitehouse (DR.I.) and four other Democrats called on the administration to “implement policies that drastically reduce if not eliminate emissions from this sector and require transparency. from this sector. “They point to the high energy requirements of cryptocurrency mining companies, the lack of transparency related to electricity consumption and the economic impact on communities where crypto mining companies establish themselves, including higher energy prices, taxes used as an incentive to lure companies and empty promises of new jobs.

Meanwhile, all kinds of cryptocurrency legislation are working their way through government houses – from allowing states to accept cryptocurrencies and exempt virtual currencies from taxes to allowing employees to be paid in cryptocurrencies if they are asked to do so. A summary of recent legislation is available from the National Council of State Legislatures.