In Albany, capital of New York State, the local Senate voted on Friday, June 3 in favor of a law to ban the mining of cryptocurrencies based on the energy-intensive “proof of work” system. It is now up to Kathy Hochul, the Democratic governor of the state, to enact the text or to veto it. Part of the sector fears that the New York example will be followed in other American territories.
Energy-intensive mining clashes with New York’s climate goals
Since China formally banned cryptocurrency mining in the summer of 2021, the United States has rocketed to the top spot in the industry’s host country rankings. New York State with its disused industrial infrastructure and cold climate represents an El Dorado for uprooted miners.
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That’s all they’re looking for, large warehouses for computers and coolness to keep energy costs down. This is the big problem of the activity. To validate transactions and create new tokens, whether bitcoin or other “proof-of-work” cryptocurrencies, computers must be running constantly to solve algorithms.
A particularly energy-intensive activity, still highly dependent on fossil fuels. It is this reason that prompted New York legislators to consider banning it, like China or Sweden. The state aims to reduce its greenhouse gas emissions by 85% by 2050.
The local assembly passed the law in April. The last remaining Democratic senators still undecided over potential job repercussions finally followed suit. This law, if enacted by the Governor, will result in an environmental impact study of cryptocurrency mining.
Above all, it will implement a two-year moratorium on mining operations using “proof of work” fueled by carbon energies. During this period, no new player will be able to enter the market and those already in place will be prevented from expanding their activity or renewing their permit.
A reflection on digital assets is underway at the federal level
A counter-productive measure for the detractors of this law. CNBC reports that mining is already, more so than in other states based on clean energies. According to the US Energy Information Administration, a third of the state’s energy production is renewable, thanks in particular to hydroelectricity.
Minors in the territory are already considering packing up to join other, more welcoming ones, such as Georgia, North Carolina, North Dakota, Texas or Wyoming. The sector especially fears that New York, a pioneering state in the supervision of mining, will serve as an example to others.
At the federal level, Joe Biden signed a first executive order on broader digital assets in March. It demands from the Office of Science and Technology Policy of the White House a series of recommendations on technologies related to the blockchain by September, in particular in environmental matters. It could lead to federal legislation governing the sector.