New York is now one step closer to becoming the first state to ban crypto mining relying on carbon-based power sources.
The news comes after state lawmakers passed a bill to block new entrants from setting up operations and renewing pre-existing operating permits.
Approved by the New York State Assembly in April, Senate Bill S6486D was passed in a 36-27 victory after Friday morning’s vote.
The bill is now up to Governor Cathy Hochul to sign into law or veto it.
#NYSenate Bill S6486D, Sponsored by @ SenatorParker, Passed (36-27, Unofficial). Related to banning cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions:https://t.co/IagLZWiztp
— New York State Senate (@NYSenate) 3 June 2022
The bill calls for a two-year moratorium on fossil-fueled cryptocurrency mining operations that use proof-of-work (PoW), a particularly energy-hungry method for verifying transactions on the blockchain.
This essentially limits the power consumption of existing mining operations to their current levels.
The bill does not prevent any operations running on renewable energy, nor does it forbid the use of less energy-intensive alternatives to proof of work, such as proof-of-stake (PoS), used by many other cryptocurrencies to verify transactions.
The PoW algorithm underpins the two biggest cryptocurrencies in the industry-Bitcoin And Ethereum,
However, the switch to the PoS consensus mechanism is expected in the third quarter of this year.
bitcoin mining environmental concerns
Much of the debate around the bill has centered on the negative impact bitcoin mining reportedly has on the environment.
According to the Cambridge Bitcoin Electricity Consumption Index, if the bitcoin network were a nation, it would rank 32nd in the world – between Argentina and the Netherlands – in annual electricity use.
“There is an increasing number of cryptocurrency mining operations in New York that are mining cryptocurrencies that use proof-of-work consensus algorithms such as bitcoin and ethereum,” reads the bill. “Some cryptocurrency mining companies bought retired fossil fuel plants and started operating at a much higher rate than the plants did before. Those companies are essentially operating as an electricity generation facility that uses fossil fuels. uses.”
Additionally, the bill mandates the creation of a “Common Environmental Impact Statement” on PoW-based mining, which will allow New York state legislators to “determine whether proof-of-work certification is a development of cryptocurrency mining companies that are developing their own The production of energy by burning fossil fuels and facilities are inconsistent with our greenhouse gas emissions targets established in law.”
However, the bill faces strong opposition from representatives of the crypto industry, fearing that if it is passed, it will shock New York’s economy.
“This is a significant blow to the state and will impact its future as a leader in technology and global financial services,” said Perian Boring, founder and president of the Chamber of Digital Commerce. CNBC,
New York-based bitcoin mining organization Greenidge Generation Holdings Inc. also responded to the recent moratorium on June 3, saying “this law will not apply to Greenidge’s operations.” It currently holds the required operating permits and has filed a renewal application before the latest legislation is passed.
Still, the firm has earned the ire of many environmentalists and climate activists because its operations could threaten the state’s aggressive climate goals.
An even more important aspect, according to Boring, is that signing the bill into law “would eliminate vital union jobs and further deny financial access to the many underbanked populations living in the Empire State.”
Want to become a crypto expert? Get the best of Decrypt straight to your inbox.
Receive the biggest crypto news + weekly roundups and more!
