New York on Track to be First US State to Ban Crypto Mining for PoW Use
Crypto mining companies in the state of New York may be the first to be subjected to similar opposition faced in China where most miners were based until 2021.
The state’s Senate seeks to establish a moratorium on cryptocurrency mining operations that use energy-intensive proof-of-work (PoW) authentication methods to validate blockchain transactions. The lawmakers believe PoW-based mining operations are an expanding industry in the State and “will greatly increase the amount of energy usage” as well as “impact compliance with the Climate Leadership and Community Protection Act”. Hence, they called for a hold on all approval of new applications or renewal for required permits for any carbon-based electricity generating facility that uses the PoW mechanism for crypto mining. They also want a generic environmental impact statement on cryptocurrency mining operations that use PoW.
New York is one of the top U.S. states for crypto mining after many miners relocated to North America from China which used to be the de facto home of crypto mining – particularly Bitcoin – until last year. The Chinese government’s clampdown on crypto mining and related activities forced many of the miners to relocate elsewhere in what the industry dubbed the Great Migration. Many of them found new homes in Kazakhstan, Russia, Iran, and the U.S. which figures later showed absorbed most of the miners as well as saw new mining companies spring up.
Though with higher overhead costs, and the additional relocation and establishment expenses, a key factor identified by many of them to have drawn them to the US is the stability of the country’s regulatory environment.
China’s ban on crypto mining is likened to a trillion-dollar gift to the U.S. which recently put out a request for information (RFI) to solicit public views on the industry. The Office of Science and Technology Policy (OSTP) put out the RFI on the energy and climate implications of digital assets to examine potential impediments or advancements to the transition to a clean and reliable electricity grid.
It wants to understand what benefits and opportunities digital assets may offer for emissions accounting as well as their implications for U.S. policy on electricity grid reliability, and greenhouse gas intensity among others. In short, the U.S. wants to be sure that it is not stifling a budding industry while ensuring that it does not have a harmful environmental impact at the same time.
The RFI follows the March 9 Executive Order signed by President Joe Biden for a whole-of-government strategy on digital assets in which issues related to their use, impact, and underlying technology are addressed among others.
However, while the set May 9 final date for the public to send in their comments is yet to come, the New York state lawmakers have presented their legislation which some advocates say could see the crypto mining industry driven out of the state along with associated jobs and opportunities.
Should the bill be passed, New York would be the first state in the U.S. to ban crypto mining as a measure to curb energy use.
The PoW mechanism use is a key factor behind China’s ban on cryptocurrency mining. Meanwhile, rather than reduce the carbon footprint left behind by the industry, a peer-reviewed study says the CO2 emitted into the environment since China left is even worse.