Will New York Ban Crypto Mining in the Near Future?

How Did We Get Here?

There’s New York’s climate protection bill, and there’s Bitcoin and other PoW-based cryptocurrencies’ notorious power hogging and the environmental ramifications.

Cambridge researchers have placed the premier crypto’s annual power consumption at about 121.36 terawatt-hours above countries like Argentina, the Netherlands, and the UAE. Per the Digiconomist, as reported by CNBC, the currency’s mining generates 37 megatons of carbon dioxide every year. The numbers are wild — and eco-activists have raised the alarm.

Generally, the world is attempting to move away from fossil energy in a bid to phase out greenhouse emissions, and climate advocates view the energy-intensive nature of cryptocurrencies like Bitcoin as a step backward.

History of the Bill

There’s an earlier version of the bill which died in 2021 after pushback from union workers. The bill would have enacted a statewide clampdown on new mining operations that utilized PoW. It also sought to block new permits for such operations.

However, union workers from Bitcoin mining company Greenidge Generations plus opposition from the International Brotherhood of Electrical Workers (IBEW) managed to thwart the bill.

IBEW Legislative Counsel Addie A.E. Jenne specifically took issue with the fact that it would “prohibit a business based upon whether it obtains its power from a generator behind the meter versus from the grid, and targets the use of a specific technology,” according to a letter opposing the act.

Kelles and co-sponsors had to go back to the drawing board and create a more union-friendly bill.

As opposed to clamping down on carbon power-based mining farms altogether, only would-be farms would be blocked in the new version of the bill. Farms that already exist, like Greenidge, will be unaffected.

The act also mandates the Department of Environmental Conservation (DEC) to prepare an impact statement on mining facilities that use the PoW consensus mechanism.

The version passed in the assembly with relative ease — with 95 senators voting in its favor while 52 senators said no. The bill now moves to the state senate. If it passes, it will land next on Governor Kathy Hochul’s desk, who’ll then sign or veto it.

The bill is reminiscent of a proposed rule voted down in the European Union in March. A draft prohibiting the use of PoW in the bloc was included in the Markets in Crypto Assets (MiCA) framework. The European Parliament’s Committee on Economic and Monetary Affairs (ECON) voted to keep the provision out of the framework, scoring a win for crypto.

New York’s Hot and Cold Relationship With Crypto

New York has proven itself a burgeoning hotspot for crypto mining. This is more so after China, once the world’s largest crypto mining hub, showed miners the door. CNBC reports that nearly 20% of the US’ hashrate is in the Empire State.

Mining companies are leveraging deserted power plants and cheap hydroelectric power and plants already connected to the national power grid.

But still, New York hasn’t been the most amenable to cryptocurrency. Crypto proponents frown at the fact that the state is the only in the country that requires prospective businesses to apply for a BitLicense.

BitLicense was introduced in 2015 and requires any aspiring virtual currency business to pay a one-off fee of $5,000, among other compliance measures. Critics have warned regulators that the measures can push out crypto businesses and stifle innovation. Indeed, this has already triggered the “Bit-Exodus” of several crypto companies, including big-time exchanges like Bitfinex, Paxful, and Kraken.

But the state’s cold shoulder hasn’t completely scared off innovators. New York is the most important economic hub in the world. It’s also a cultural and intellectual melting point, which can still help it attract and retain crypto players — as it has NFT marketplace Opensea, blockchain software company Consensys, exchange Gemini, and more.

Yet, the state’s clout could be the poison in the wine for crypto if the bill passes. Being an influential state, other states, especially the so-called blue states, could replicate the move, spelling bad news for crypto.

Reactions From the Crypto Space

Crypto proponents have decried the move as terrible for the industry. They assert that it could send the wrong message to the world.

Kelles has taken to Twitter to reassure crypto fans that the bill “would not in any way restrict the ability to buy, sell, invest, or use cryptocurrencies” in the state.

But the community is not persuaded. The blockchain umbrella body, the Blockchain Association, called on New Yorkers to “make their voices heard,” with the head of policy Jake Chervinsky likening the state’s approach to cutting off the industry’s limbs one by one.

Digital asset mining financier Foundry CEO Mike Colier accused Kelles of “killing high-tech business,” with Republican assemblyman Robert Smullen labeling the legislation “anti-tech” and “disguised as an environmental law.”

Final Thoughts

NY’s move to put the squeeze on Bitcoin mining is unprecedented. While the bill’s author insists it won’t affect the average person’s day-to-day interaction with crypto, optics matter.

The state is the most powerful in the land, and it could have a ripple effect across crypto’s pond. One thing that’s for sure is that crypto mining will always find a home. It’s up for NY to decide whether to continue being a crypto hub or be known for its former glory.