New York just passed a bill to ban bitcoin mining

Following an early morning vote in Albany yesterday, New York lawmakers passed a bill that would ban certain bitcoin mining operations powered by carbon-based electricity sources. The bill now heads to the desk of Governor Kathy Hochul, who can either sign it into law or veto it.

According to Perianne Boring, founder and president of the Digital Chamber of Commerce, if Hochul signs the bill, New York will become the first state in the country to ban blockchain technology infrastructure. Industry insiders also told CNBC that it could cause a domino effect across the United States, which currently leads the way in global bitcoin mining, accounting for 38% of the world’s miners.

New York’s bill, which was previously passed by the State Assembly at the end of April before going to the state Senate, calls for a two-year moratorium on certain cryptocurrency mining activities using the Proof of Work method. (PoW) or proof of work is a consensus algorithm commonly found on blockchains, used in confirming transactions and creating new blocks on that blockchain (blockchain). Proof of Work (PoW) mining, which requires complex equipment and a lot of electricity, is used to generate bitcoins. Ethereum is moving to a less energy intensive process, but will still use this method for at least a few more months.

The push for the 11-hour vote came as leaders in the state capital managed to oust several senators who had previously refused to make a decision.

Lawmakers who support the bill say they are looking for ways to limit the state’s carbon emissions. If it passes – in two years, unless a Proof of Work (PoW) crypto mining company uses 100% renewable energy, the company will not be allowed to expand, or license renewal and new entrants will not be licensed.

According to Perianne Boring, the net effect of this would be to weaken the New York economy by forcing cryptocurrency mining businesses to take jobs elsewhere.

“This is a significant setback for the state and will impede its future as a leader in global financial services and technology. More importantly, this decision will eliminate the important work of the union and continues to deprive many of the low-income populations living in the Empire State,” Perianne Boring told CNBC. That is a view echoed by Amando Fabiano of Galaxy Digital, who says that “New York is setting a bad precedent that other states can follow”. In terms of time, the law will take effect immediately after the governor signs it into law.

The irony of banning bitcoin mining

Part of the bill involves conducting a statewide study of the environmental impact of Proof of Work (PoW) mining operations on the likelihood of achieving positive climate goals. New York’s polarization is set forth under the Climate Leadership and Community Protection Act, which requires cutting New York’s greenhouse gas emissions by 85% by 2050.

Boring told CNBC that the recent surge in support in favor of this year’s proposed ban has a lot to do with this transition to sustainable energy.

“Proof of Work (PoW) 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 actually leads the way in terms of compliance with that Act as the sustainable energy mix of today’s global bitcoin mining industry is estimated at just under 60%.”

“The regulatory environment in New York will not only discourage their targeting, but also potentially discourage new, renewable energy-based miners from doing business with the state due to the potential for more regulation.” more,” said John Warren, CEO of institutional bitcoin mining company GEM Mining.

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 is aiming for 100% carbon-free electricity, and the state already 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 the banks of computers used in cryptocurrency mining, as well as a lot of abandoned industrial infrastructure being utilized. for reuse.

Some industry insiders don’t wait for the state to 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 begin to move 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. Zhang continued: “Even when Foundry deployed $500 million in capital for mining equipment, less than 5% of the capital went to New York because of the unfriendly political climate.”

Domino effect

If the cryptocurrency mining ban is signed into law by the governor, it could have several further implications. In addition to potentially challenging investments 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 losses.

Boring said: “There are many unions against this bill because it could have serious economic consequences. Bitcoin mining operations are bringing good, well-paid and high-class jobs to the miners. local community. One of the members of this working community said their average salary is $80,000 a year.”

As Boring pointed out, New York leads the way in state legislation, so there is also the potential for imitation to spread across the country. However, many others in the industry say that concerns about the effects of the New York moratorium are overblown.

Veteran bitcoin miners such as Core Scientific co-founder Darin Feinstein say that the industry with New York is already familiar, generally hostile to the crypto mining business.

“There’s no point in going to a region you don’t want to,” Feinstein said. “Bitcoin miners are really a data center business and data centers need to be located in jurisdictions,” Feinstein said. want a data center within their borders… If you’re going to ignore that, then you have to deal with the consequences of doing business in an area that doesn’t want your business.” Feinstein and other miners point out that there are plenty of friendlier jurisdictions: Georgia, North Carolina, North Dakota, Texas and Wyoming have all become major mining destinations.