Lawmakers in New York have passed a bill to ban certain cryptocurrency mining operations that run on carbon-based power sources
In the city that never sleeps, lawmakers this week passed a bill that could make New York the first US state to place a moratorium on certain cryptocurrency mining operations.
The bill is being touted as an environmental conservation law “in relation to establishing a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; and to require a comprehensive generic environmental impact statement review.”
Essentially, the NY bill seeks to ban for two years, certain crypto mining operations that run on carbon-based power sources.
As the bill has now been passed, it heads to the desk of Governor Kathy Hochul, who could sign it into law or veto it.
If Hochul signs the bill, it would make New York the first state in the country to ban blockchain technology infrastructure, and could potentially have a domino effect across the US, industry insiders told CNBC.
According to CNBC, the New York bill previously passed the State Assembly in late April before heading to the State Senate.
It seeks a two-year moratorium on certain cryptocurrency mining operations which use proof-of-work authentication methods to validate blockchain transactions.
Lawmakers backing the NY legislation are seeking to curb the US state’s carbon footprint by cracking down on mines that use electricity from power plants that burn fossil fuels.
If signed by the Governor, a two year ban will be enacted unless a proof-of-work mining operation uses 100 percent renewable energy. The operation would not be allowed to expand or renew permits, and new entrants would not be allowed to come online.
Essentially, cryptocurrencies are created when high-powered computers compete against other machines to solve complex mathematical puzzles, a process known as mining.
Proof-of-work mining requires sophisticated equipment, and a great deal of electricity, is used to create cryptocurrencies.
Some cryptocurrencies such as Ethereum are switching to a less energy-intensive process, but will still use this method for at least for another few months.
As it currently stands, a third of New York’s in-state generation comes from renewables, according to the latest available data from the US Energy Information Administration.
It should be noted that New York includes its nuclear power plants as part of its 100 percent carbon free electricity goal.
CNBC reported New York produces more hydroelectric power than any other state east of the Rocky Mountains.
Historically New York is noted as a US state not friendly to crypto mining operations.
Other US states are said to be much friendlier to crypto mining jurisdictions, including Georgia, North Carolina, North Dakota, Texas and Wyoming.
It is widely known that crypto mining typically comes with an environmental cost.
This energy-sapping activity often relies on electricity generated with fossil fuels, particularly coal.
Cambridge research has previously estimated that crypto mining consumes 0.45 percent of global electricity production.
And America is the leading crypto mining operation globally, accounting for 38 percent of the world’s miners.
Last year the Cambridge Bitcoin Electricity Consumption Index (CBECI), compiled by the university’s Cambridge Centre for Alternative Finance, found that the US, Kazakhstan and Russia were now the top three producers of the cryptocurrency.
That came after China in June 2021 began a crackdown on Bitcoin and other cryptocurrencies.
Beijing then declared all transactions in the currency to be illegal.
In 2019 China had accounted for 75 percent of the world’s Bitcoin mining energy consumption.
Other countries also banned crypto mining.
At the start of this year, Kosovo officially banned cryptocurrency mining, as the Balkan country battled ongoing blackouts and an energy crisis, caused by soaring global energy prices and an electricity shortage after its largest coal-fired power plant was shut down over a technical issue.
Weeks later Russia’s central bank proposed the banning on the use and mining of cryptocurrencies.