In a historic regulatory step, New York has become the first US state to ban some types of cryptocurrency mining. Gov. Kathy Hochul signed a bill Tuesday that triggers an immediate moratorium on energy-intensive “evidence ofon-work” fossil fuel powered crypto mining. For two years, no new permits will be issued for such mining activities and no existing permits will be renewed, according to to the law (A7389C).
The bill cites heavy climate and infrastructure costs on crypto mining in its motives. In addition to the moratorium, the new law requires the New York Department of Environmental Protection to prepare an environmental impact statement assessing evidence of the work’s impact statewide within a year, which can then be used to inform of future politics.
proof-on-work mining uses large networks of computers to generate encrypted blocks in the blockchain. Basically: computers race to solve long sequences of useless, arbitrary, and increasingly complex mathematical equations that confirm their intent, and then they tabulate and track transaction data across the network. The end result of all this is that the winning miners end up getting a portion of a new crypto coin, making mining profitable.
proof-on-work aims to keep the blockchain decentralized and fraud-free through an incredibly high participation costs, and these costs are paid for through energy. Outside the US, European regulators also have considered limitations and prohibitions on the practice. Crypto mining is a huge drain on the power gridand the industry as a whole produces a huge amount of carbon emissions.
“I am signing this bill into law to build on New York’s climate leadership and community protection law, the most aggressive climate and clean energy law in the nation, while continuing our ongoing efforts to support economic development and job creation locations in upstate New York,” Hochul wrote in a memo shared with Gizmodo, explaining the governor’s reasoning behind her approval of the law. “I recognize the importance of creating economic opportunity in communities that are left behind. That is why I will continue to invest in economic development projects that create the jobs of the future… while taking important steps to prioritize environmental protection,” she added.
Worth noting: the moratorium still allows crypto operators that rely heavily on less energy intensive “proof of stake” model. And miners are allowed to continue working and building proof of work setups that rely on non-fossil fuel sources like hydroelectric, nuclear and wind. But even this takes valuable green energy from the grid that could be used for more necessary purposes.
The newly signed bill was approved by the state Senate back in June, but Hochul remained noncommittal on it until this week. Procrypto lobbyists (and New York Citycome on Eric Adams) pushed hard for governor to veto the bill, expressing concern that the regulation would stifle business interest in the state and hinder industry growth. Crypto supporters also worried that the New York bill would eventually lead to similar legislation elsewhere — since New York has a reputation for being democratically modern, according to report from CNBC which quotes industry voices extensively. But crypto is already evolving pretty good job on suffocating myself over the past few months.
Recently, the collapse on one of the largest crypto exchanges, FTX, sent shockwaves through the blockchain, bitcoin value tank and leads to other exchanges is lowered. FTX collapsed largely due to founder and CEO Sam Bankman-Fried’s poor judgment and possibly illegal driving of investor funds. And whether or not the courts end up holding SBF responsible for all that missing money, it’s undeniable that crypto is full of fraud.
Also worth considering: the crypto industry provides value to a very small number of people. Not exactly a public good. And as Texas has shown, crypto mining is a major drain on the energy grid — perhaps as much all households in Houston.
New York has seen an increase in crypto mining operations in recent years, and in some cases the industry has negatively impacted communities – even apart from the negatives of the climate. In Plattsburgh, the influx of miners has led to skyrocketing winter energy bills and massive noise disturbances, while producing no local economic benefit, according to report from MIT Technology Review. “From 2016 to 2018, crypto mining in upstate New York increased annual electric bills by about $165 million for small businesses and $79 million for individuals,” the article notes.
So Plattsburgh residents are likely encouraged by the new regulation along with environmental groups. “This first-in-the-nation law should set the standard for every other state where crypto miners come, mine resources and wreak havoc,” the nonprofit advocacy organization, Earthjustice, said in declaration. “We very much look forward to DEC’s fact-finding review, which we are confident will confirm…[that] crypto mining is a major threat to climate security and should be strictly regulated.”