By: Hadassa Kalatizadeh
New legislation was signed into law inhibiting the growth of the cryptocurrency mining industry.
As reported by Crain’s NY, on Tuesday evening Gov. Kathy Hochul signed into law a bill imposing a two-year ban on issuing new permits to companies for cryptocurrency mining operations in facilities using a carbon-based fuel. The bill was proposed last June by the state legislature, and has been waiting to be signed into law for close to six months. The new law also prevents the state from renewing permits, but does not affect companies which already have valid permits. So, for the next two years, unless a proof-of-work mining company uses 100% renewable energy, it will not be allowed to expand or renew permits.
“It is the first of its kind in the country,” Hochul said regarding the new law. Supporters of the law say that cryptocurrency mining is energy intense and stands in the way of reaching the state’s climate goals, enacted as part of New York’s 2019 Climate Leadership and Community Protection Act.
The new law also calls on the state Department of Environmental Conservation to conduct a study regarding the environmental impact of cryptocurrency mining. The analysis will include the number and location of existing cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions in the state. Proof-of-work mining, which requires sophisticated gear and a lot of electricity, is used to create bitcoin, and other similar tokens. As per CNBC, the bill can create a domino effect across the country, which is currently leading the global bitcoin mining industry.
“Other blue states often follow the lead of New York state and this would be giving them an easy template to replicate,” said Kevin Zhang of digital currency company Foundry. Still, he noted that there are plenty of crypto-friendly states, which would be happy to take NY’s place and allow the mining. Texas, Georgia, North Carolina, North Dakota and Wyoming are already major mining states. The industry currently accounts for roughly 38 percent of the world’s miners. “The approval will set a dangerous precedent in determining who may or may not use power in New York State,” the Chamber of Digital Commerce wrote in a statement.
Opponents to the bill say the ban will just push New York to the sidelines, while mining continues elsewhere. “This is a significant setback for the state and will stifle its future as a leader in technology and global financial services”, said Perianne Boring of the Chamber of Digital Commerce. “More importantly, this decision will eliminate critical union jobs and further disenfranchise financial access to the many underbanked populations living in the Empire State,” Boring previously told CNBC. Critics also said the legislation can likely also scare renewable-based miners from doing business in NYS, as they eye future potential stifling legislation.
Gov. Hochul responded to some of these concerns in her statement on Tuesday. She said she recognizes the importance of “creating economic opportunity in communities that have been left behind” and that she will “continue to invest in economic development projects that create the jobs of the future.”