New York City Mayor Eric Adams is Right – Bitcoin Mining Moratoriums Are a Bad Idea, Says Sphere 3D CEO Patricia Trompeter.
By the time you read this, New York Governor Cathy Hochul may have already signed a bill that bans new bitcoin mining permits in the state for two years. As I write this, the controversial bill, which was passed in the state House, is in limbo awaiting Hochul’s signature.
A handful of politicians threatened to oppose Hochul’s election bid if he did not sign the bill. Meanwhile, New York City Mayor Eric Adams, who is famous on crypto, urged the governor to veto the bill.
Mayor Adams is right. The bitcoin mining moratorium is a bad idea, and Governor Hochul shouldn’t have signed off on it. The bill’s direct targets for reducing energy consumption and greenhouse gas emissions are critically important. But the proposed legislation would utterly fail to pursue those objectives.
The mining moratorium will also have a negative impact on Empire State jobs and damage the state’s reputation for innovation and fintech leadership.
Instead, lawmakers should consider other options that would provide incentives for more sustainable bitcoin mining to protect both the environment and valuable jobs. More on that in a moment, but first, let’s back up and examine the reasons why we’re in this situation.
New York: Why are some lawmakers targeting bitcoin mining?
To understand how we got here, it is important to acknowledge the ignorance of galactic-scale subject matter among some people who are in a position to regulate cryptocurrency and related activities such as bitcoin mining. Some policy makers not only lack a solid understanding of crypto mining issues, but they are completely clueless about cryptocurrencies. in general.
For example, some policymakers have speculated that because “crypto” means “hidden” and “currency” means “money”, cryptocurrencies must exist to hide money made from illegal activities. Reality: Blockchain keeps an indelible account of transactions, while criminals are routinely busted with piles of untraceable paper currency issued by the US Treasury.
That leap in logic was real”Tell me you know nothing about crypto ‘I know nothing about crypto'” Moment. Thankfully, this level of ignorance is not shared universally among lawmakers, many of whom Huh well informed. But this is an issue.
With the New York mining moratorium in particular, the problem may be due to a misunderstanding of how much energy the mining process consumes and its greenhouse gas effect. Bitcoin accounts for only 0.23% of total energy consumption, and data centers in the US account for less than 2% of kilowatt-hours.
This is not to say that crypto mining energy consumption isn’t worth addressing – it is. But it is a species of greenwashing to claim that mining restrictions will seriously address climate issues when transportation makes up 27% of US greenhouse gas emissions. No one is proposing to shut down LaGuardia or JFK. Bitcoin mining is not well understood, so it is an easy target.
Why sanctions are the wrong approach
A ban like the one currently sitting on Governor Hochul’s desk is the wrong approach for two simple reasons: it won’t work and it will cause harm. If the governor signs it, companies planning to open in New York will open up to another region, taking potential jobs from the state.
Not only would those jobs be lost in another state, the restrictions are reportedly designed to curb energy consumption and emissions. Addressing climate change requires collective action, so pushing companies to consume energy elsewhere outside of New York is pointless. The ban will not cut overall energy consumption, but it will drive revenue for clean energy infrastructure outside the state.
Let’s keep in mind that bitcoin miners can be great corporate citizens. For example, lawmakers in New York should look north toward Canada. Jaime Leverton, Hut 8 Mining Corp. CEO of one of the largest mining firms in North America. He and his team work closely with City of Medicine hat officials to strengthen the local economy and protect the environment.
What can legislators do instead?
As CEO of a Nasdaq-listed, net carbon-neutral crypto mining company (not based in New York), I am generally not in favor of additional regulation as it contradicts the decentralized ethos of the industry. But lawmakers who are informed of the industry and have a clear eye on their goals can develop thoughtful proposals, such as the bipartisan framework created by Senators Gillibrand (D-NY) and Lumis (R-WY).
Furthermore, there is much lawmakers can do outside the regulatory framework to achieve the stated goals of the New York bitcoin mining moratorium. Incentives to promote the use of renewable energy can make a real difference by reducing the need for sustainability-conscious crypto miners to use carbon offsets when sourcing energy from coal-fired power plants.
Providing incentives to build more green hosting facilities is an effective strategy to help reduce the environmental impact of mining and other online activities.
We should encourage industry organizations to work towards more sustainable operations. Crypto Climate Accord (CCA) signatories have vowed to reach carbon net-zero operations by 2040, but there is not an easy path without clear green mining standards.
New York Mining Bill: It’s Time for Leaders to Stand Up and Be Heard
Regardless of the fate of New York’s bitcoin mining bill, we still need to address the impact of crypto on climate change. As small as its environmental impact relative to industries such as transportation, the crypto sector has a responsibility to reduce its carbon footprint, and many industry leaders acknowledge that obligation.
There are ways to move businesses, stifle innovation, and achieve sustainability without forcing communities to be deprived of revenue and economic opportunities. Crypto mining companies can be partners, contributing money to much-needed infrastructure and education in communities while simultaneously creating jobs.
The proposed type of mining ban in New York is a lazy response. We need leaders in the public and private sector who understand the industry to find real solutions through collaboration – now is the time for those leaders to stand up and listen.
About the Author
Patricia Trompeter Sphere is the CEO of 3D Corp., a pure carbon-neutral cryptocurrency miner. During his 15+ years leading business restructurings and turnarounds for GE Capital, Patti gained significant expertise in optimizing operational systems and igniting companies’ growth. As the first female minority CEO of a crypto mining company, she is passionate about being a mentor and role model for minority female-owned businesses and hopes to inspire girls and women to take on executive roles in every industry .
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