New York is the first U.S. state to ban cryptocurrency mining. Governor Kathy Hochul signed a measure Tuesday that bans fossil-fueled “proof-of-work” crypto mining. Law prohibits new mining licenses and renewals for two years (A7389C).
The measure notes crypto mining’s environmental and infrastructure implications. On top of the ban, the new law mandates that New York’s Department of Environmental Conservation examine proof of work’s statewide impact within a year to influence future policy.
Proof-of-work mining employs computer networks to generate blockchain blocks. Computers answer pointless, arbitrary, and more difficult math problems to validate their intent, then tabulate and trace transaction data throughout the network. The victorious miners receive new crypto coins at the end, making mining profitable.
Proof-of-work keeps the blockchain decentralized and fraud-free by charging a high energy fee for participation. European regulators are also considering bans and limitations. Crypto mining drains the electricity system and causes large carbon emissions.
Hochul signed the bill “to build on New York’s nation-leading Climate Leadership and Community Protection Act, the most aggressive climate and clean energy law in the nation,” she wrote in a memo shared with Gizmodo.
“I know the importance of generating economic opportunity in underserved communities. She’ll continue to invest in economic development projects that produce future jobs, while simultaneously protecting the environment.
The moratorium nevertheless authorizes “proof of stake” crypto operations. Miners are able to run and create proof-of-work setups using hydroelectric, nuclear, and wind. Even so, vital green energy is removed from the system.
The state senate adopted the law in June, but Hochul was undecided until last week. Pro-crypto lobbyists (including NYC mayor Eric Adams) urged the governor to veto the bill, citing fears that it will hinder business interest and industry growth.
Crypto proponents worry that the New York measure may lead to similar legislation elsewhere, as New York is a Democratic trendsetter, according to a CNBC story that quotes industry voices. Crypto has been strangling itself for months.
FTX’s bankruptcy sent shockwaves through the blockchain, sinking bitcoin’s value and downgrading other exchanges.
FTX imploded because founder and CEO Sam Bankman-Fried mismanaged investor monies. Whether courts hold SBF liable for the missing money or not, bitcoin is full of fraud.
The crypto sector benefits extremely few people. It’s not public. And as Texas has shown, crypto mining drains the electrical grid—maybe all of Houston’s households.
In recent years, crypto mining operations have increased in New York, and in certain situations, the sector has badly impacted neighborhoods.
According to MIT Technology Review, an invasion of miners in Plattsburgh led to increasing winter heating expenditures and huge noise disruptions with no local economic benefit.
From 2016 to 2018, crypto mining in upstate New York increased small businesses’ electric bills by $165 million and individuals by $79 million.
The new regulation certainly cheers Plattsburg locals and environmental groups. Earthjustice: “This first-in-the-nation law should set the standard for every other state where crypto miners are wreaking havoc.”
We’re looking forward to the DEC’s fact-finding review, which we’re confident will confirm that crypto mining is a threat to climate security and needs to be regulated.