The risk of causing a domino effect across the US

New York State wants to ban new bitcoin mining operations, a move that some in the industry fear could trigger a domino effect across the US. This Measure A.7389C prohibits the approval of new applications or permits for digital asset mining operations that use electric power generated from fossil fuels, such as coal. .

The bill, which is rapidly moving through the state capital in Albany, calls for a two-year moratorium on certain new registrations that allow cryptocurrency mining using methods of validating over-the-counter transactions. Blockchain uses energy from fossil fuels that create a lot of carbon emissions.

Lawmakers who funded the bill say they’re looking to limit the state’s carbon footprint by banning cryptocurrency mining powered by fossil fuel-burning power plants. For two years, unless a virtual currency mining company uses 100% renewable energy, it will not be licensed, new registration to extend or renew the license.

According to Galaxy Digital’s Head of Mining, Amanda Fabiano, the real effect of this will be to weaken the New York economy by forcing businesses to migrate elsewhere. Cryptocurrency is inherently an emerging global financial industry. By some estimates, more than 100 million individuals worldwide are already using Bitcoin. Digital assets are giving millions of economically disadvantaged people access to the financial system by storing their savings in a vehicle independent of rapidly increasing inflation. , bank fees and enduring inequality in our banking system.

“New York will be left behind, losing to other states and, worst of all, other more progressive countries,” Fabiano said. New York is setting a bad precedent that other states can follow.

At this point, the State Assembly has passed the bill and is currently under consideration by the Democratic-controlled State Senate, which will vote on the bill soon. If it is passed, it will land on the desk of Governor Kathy Hochul, who can either sign into law or reject the decision.

“If it passes, it would make New York the first state in the country to ban blockchain technology infrastructure,” explains Perianne Boring, founder and president of the New York State Chamber of Digital Commerce.

NewYork’s love-hate relationship with cryptocurrency

In a way, New York offers dream conditions for bitcoin miners. Miners compete in a low-margin industry where the only variable cost is often energy, so they have a strong economic incentive to switch to the cheapest sources of electricity in the world. gender – which also tends to regenerate.

According to the latest data available from the US Energy Information Administration, one-third of the electricity in the state of New York comes from renewables. New York counts its nuclear power plants towards the goal of 100% carbon-free electricity, and the state produces more hydroelectric power than any other state east of the Rocky Mountains.

The state also has a cold climate, which means less energy is needed to cool down its crypto-mining computers, as well as a lot of abandoned industrial infrastructure that has been repurposed for reuse. . Cryptocurrency miner Coinmint, for example, operates a facility in a former Alcoa aluminum smelter in Massena that harnesses the region’s abundant wind energy, plus cheap electricity produced from dams on the St. Lawrence. Massena with a transformer capacity of 435 megawatts is considered to be one of the largest bitcoin mining facilities in the US.

But not all activities run on renewable energy. Companies like Greenidge Generation, which runs its bitcoin mining facility in a coal plant formerly retrofitted with natural gas, have drawn the ire of some lawmakers, who now want to stamp shut down the state’s cryptocurrency mining industry.

The northern border town of Plattsburgh temporarily enacted its own local ban on cryptocurrency mining activities in 2018, and just last year politicians tried to shut down departments. of the mining industry across the state. That move fell through after a union representing electricity workers defended the mining industry.

However, this latest attempt seems likely to be real. Part of the bill currently being considered in Albany involves conducting a statewide study of the environmental impact of cryptocurrency mining operations on New York’s ability to achieve extreme climate goals set out under the Climate Leadership and Community Protection Act, New York’s requirement is that greenhouse gas emissions be cut by 85% by 2050. Boring told CNBC that the The recent surge in support with the newly proposed ban has a lot to do with the quest to transition to sustainable energy.

“Cryptocurrency mining has the potential to lead to a global transition to more sustainable energy,” Boring told CNBC’s Crypto World, pointing to the irony of the moratorium. “The bitcoin mining industry is really leading in terms of compliance with that Act.” However, the sustainable energy mix of today’s global bitcoin mining industry is estimated at just under 60%.

In a conference conversation Bitcoin 2022 last month in Miami, former presidential candidate and New Yorker Andrew Yang told CNBC that when he spoke with industry insiders, he realized that cryptocurrency mining could help grow demand. about a renewable energy source.

“In my opinion, a lot of these things will push activities to other places where they may not be achieving the goals of policymakers. Some people in the industry are not waiting for the actions to be taken,” Mr. Yang said. legislators issue a formal ban before taking action”.

Data from digital currency firm Foundry shows that the market share of the New York bitcoin mining network has dropped from 20% to 10% in the past few months, as miners have started moving into jurisdictions. crypto-friendly than in other parts of the country. “Our clients are scared to invest in New York State,” said Kevin Zhang of Foundry.

Domino effect

If New York passes the crypto mining ban, it could have some further implications. In addition to the potentially daunting investment in more sustainable energy sources, industry advocates tell CNBC that each of these facilities makes a significant economic impact with many local suppliers. methods include electricians, engineers and construction workers. According to experts, an exodus of cryptocurrency miners could lead to job shortages.

Boring said: “There are many labor unions against this bill because it could have serious economic consequences. Bitcoin mining operations are providing good and well-paying jobs for miners. local community”. As Boring points out, New York leads the way in state legislation, so there’s also the potential for imitation to spread across the country.

Kevin Zhang, Foundry’s Director of Mining Strategy, said: “Other blue states often follow the lead of New York state and this will give them an easy template to replicate the law. “.