New York on Track to be the First State to Ban Proof of Work Mining - News Brief

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The New York State Senate passed a bill targeting proof-of-work (PoW) mining early Friday morning in an effort to address some of the environmental concerns seen around cryptocurrencies. The bill, which was passed by the state Assembly last month, would impose a two-year moratorium on any new PoW mining projects powered by carbon-based fuel in the Empire State, though existing mining firms or ones currently undergoing the permit renewal process would be allowed to continue operations. The Senate voted 36-27 in favor of the bill.

[De, N. and Ligon, C. New York Senate Passes Bitcoin Mining Moratorium. (Accessed June 3, 2022)].

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Having passed both the Assembly and the Senate, the bill is now on its way to Gov. Hochul's desk for consideration. If approved, New York would be the first State in the U.S. to impose a moratorium on cryptocurrency mining.

Used mostly in the mining of Bitcoin, proof-of-work (PoW) consensus mining is the most decentralized method of mining, but draws harsh criticism due to the high usage of electricity necessary to accomplish the mining function. Now, claiming concern relative to carbon emissions, many of the Senators previously undecided on the bill flipped to favoring it, hence its passage.

Lawmakers backing the legislation say they are looking to curb the state’s carbon footprint by cracking down on mines that use electricity from power plants that burn fossil fuels. If it passes — for two years, unless a proof-of-work mining company uses 100% renewable energy, it would not be allowed to expand or renew permits, and new entrants would not be allowed to come online.

[Sigalos, M. New York just passed a bill cracking down on bitcoin mining — here’s everything that’s in it. (Accessed June 3, 2022)].

But "[p]olicymakers often only focus on the high energy consumption by Bitcoin miners, ignoring the fact that a significant chunk of this energy comes from renewable sources, especially in New York where 50% of the energy is produced from renewable sources" Jha, P. New York State Senate passes Bitcoin mining moratorium. (Accessed June 3, 2022)]. And while criticism of PoW mining increased at the peak of last year's bull run, a report from the Bitcoin Mining Council demonstrated that the global mining industry is utilizing electricity with a 64.6% sustainable power mix; [See Coghlan, J. Sustainable energy usage for BTC mining grows nearly 60% in a year. (Accessed June 3, 2022)].

Founder and president of the Chamber of Digital Commerce, Perianne Boring, maintains this bill "could have a domino effect across the U.S., which is currently at the forefront of the global bitcoin mining industry, accounting for 38% of the world’s miners" [Sigalos. Supra].

The net effect of this, according to Boring, would be to weaken New York’s economy by forcing businesses to take jobs elsewhere. 'This is a significant setback for the state and will stifle its future as a leader in technology and global financial services. More importantly, this decision will eliminate critical union jobs and further disenfranchise financial access to the many underbanked populations living in the Empire State,' Boring tells CNBC. It is a sentiment echoed by Galaxy Digital’s Amando Fabiano, who says that 'New York is setting a bad precedent that other states could follow.'

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