Go green or go home? What New York State’s mining moratorium could mean for the crypto industry
On April 26th, New York State spearheaded the regulatory battle with crypto when its assembly voted for a two-year moratorium on crypto mining operations that use energy from fossil fuel power plants. Depending on how you look at it, this development could either be a signal of a new alarming legislative trend or a trigger that would accelerate the movement of the digital asset industry towards a more sustainable path.
Moratorium with further evaluation
The lower house of the New York state legislature, the Assembly, passed legislation that would suspend all new mining operations using the Proof-of-Work (PoW) consensus mechanism for two years, as well as the renewal of existing permits.
The bill, S6486D/A7389C, is being marketed by its sponsors as a necessary act to comply with the Climate Leadership and Community Protection Act of 2019 and its goal of reducing greenhouse gas emissions by 40% by 2030. The bill also mandates an “overall environmental impact statement” to be issued by the Department of Environmental Conservation (DEC), which should assess the energy use and greenhouse gas emissions of PoW miners and their impact on public health.
The bill next faces a vote in the upper chamber, the state Senate, after which, if approved, it goes to Gov. Kathy Hochul, who can either veto it or sign it into law.
The Blockchain Association advocacy group believes that the “anti-technology” bill can still be scuttled in the Senate. The heated assembly debate lasted three hours, and the vote ended far from unanimously: 95 in favor, 52 against.
A state affair
The passage of the bill raised an alarm from the crypto community. The Crypto Council for Innovation divided a fear that the initiative could push innovation into the background. Kyle, Schneps, director of public policy at Foundry, underlined that the initiative selects just one of many industries working with fossil fuels in the state and the Decentralized Finance (DeFi) Education Fund. stressed Legislature’s refusal to recognize the benefits of the industry.
The patron of the bill is environmental and housing rights activist Anna Kelles dismiss those arguments in a Twitter discussion with Blockchain Association Head of Policy Jake Chervinsky. She noted that the bill is “extremely narrow” and will only cover “large-scale crypto mining” at power plants that use fossil fuels. Additionally, the moratorium only applies to mining operations at decommissioned power plants, with the sole aim of preventing the large-scale restart of such facilities, which could be stimulated by crypto mining profitability. From her estimatethere are 49 such facilities in upstate New York.
As John Belizaire, CEO of green data center developer Soluna Computing, noted to Cointelegraph, the moratorium will certainly have “a cooling effect” on crypto mining in the state. He believes the state is taking “prudent steps” to study the environmental impact issue, as the industry’s growth has raised concerns about whether it is extending the life of old, high-carbon fuels:
“We would encourage the state to engage in an open dialogue with forward-thinking companies to learn how the crypto mining industry could accelerate renewable energy development in New York.”
John Warren, CEO of GEM Mining — which claims its 32,000 miners are 97% carbon neutral — commented to Cointelegraph that the passage of this bill shows that the New York legislature is “dominated by radical and fringe groups” that “a new and innovative finance and technology sector.” Warren said:
“It’s no wonder why so many citizens and businesses are fleeing New York to pursue great opportunities in business-friendly states with common sense. As a graduate of New York University and someone who loves New York, it is painful to see the state implement policies that mirror China and Russia.”
The future is green
The experts tend to agree on the possible effects of the draft law beyond the borders of the state of New York. Warren believes the issue represents a unique case of a “radical outlier” and will therefore have little impact on the United States’ role as the world’s cryptocurrency mining leader:
“We’ve recently seen the opposite as many lawmakers have openly encouraged crypto operations in their states, even going so far as to legislate in favor of crypto. Take Georgia, for example.”
Belizaire also had a hard time naming other states with similarly hostile policies toward miners. He cited the example of North Dakota as a state that saw the potential to create jobs in crypto mining and decided to partner with the industry:
“The NY ban seems to send a one-way negative message even before a conversation takes place. Unfortunately, this reinforces the narrative that the PoW protocol is bad for the planet.”
Regardless of the outcome of the vote, the New York moratorium is unlikely to be a case of a single state’s allergy to crypto mining. Kelles, who comes from an environmental activist background, has repeatedly stressed that her concern is the potential impact on New York State’s environment, not the crypto industry at large. It is similar to a larger discussion about PoW mining that takes place at both national and international levels.
In October 2021, more than 70 NGOs co-signed a letter to the US Congress drawing lawmakers’ attention to the numerous cases of fossil-fuel power plant restarts across the country.
As Steve Wright, former general manager of Chelan County – Washington’s public utility district – explained at the January 2022 congressional hearing, miner interest in decommissioned fossil fuel assets is driven by a simple market mechanism, meaning there is no rational reason for it stop exploring such opportunities.
In that sense, the environmental push by New York state legislators is an example of a broader discussion that will inevitably continue around crypto mining and fossil fuels. While the New York law doesn’t say a single word about the use of renewable energy in mining, it could actually encourage the use of green energy — Warren, who doesn’t see the measure as appropriate, nonetheless conceded such a possibility exists.
“I think the moratorium will make mining companies reconsider using fossil fuels to power their operations. New York’s mission is clear: it relies on renewable energy. PoW crypto mining needs to get on the bus.”
Crypto mining could even become a “special ingredient” in the larger green energy shift, he says.
https://cointelegraph.com/news/go-green-or-go-home-what-the-ny-state-mining-moratorium-could-mean-for-crypto-industry Go green or go home? What New York State’s mining moratorium could mean for the crypto industry