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On April 26, the State of New York put itself at the forefront of the regulatory struggle with crypto, as its Assembly voted for a two-year moratorium on crypto mining operations that use energy generated by fossil-fuel power plants. Depending on how one looks at it, this development could either signal a new alarming legislative trend or a trigger that would accelerate the digital asset industry\u2019s movement toward a more sustainable path.\u00a0<\/p>\n
The lower chamber of the NY state legislature, the Assembly, passed a bill that would put a two-year hold on any new mining operations using the proof-of-work (PoW) consensus mechanism, as well as on the renewal of existing permits. <\/p>\n
The bill, S6486D\/A7389C, is marketed by its sponsors as a necessary act of compliance with the 2019 Climate Leadership and Community Protection Act and its goal to reduce greenhouse gas emissions by 40% by 2030. The bill also mandates a \u201cgeneric environmental impact statement\u201d to be made by the Department of Environmental Conservation (DEC), which should evaluate the energy consumption and greenhouse gas emissions of PoW miners and their impact on public health. <\/p>\n
Next up for the bill is a vote in the upper chamber, the State Senate, after which, if approved, it would go to Governor Kathy Hochul, who can either veto it or sign it into law. <\/p>\n
The advocacy group Blockchain Association believes<\/a> that the \u201canti-technology\u201d bill can still be sunk in the Senate. The heated debate in the Assembly lasted for three hours, and the vote ended up far from unanimous: 95 in favor, 52 against. <\/p>\n The passage of the bill triggered an alarm from the crypto community. The Crypto Council for Innovation shared<\/a> a concern that the initiative could put innovation on the back burner. Kyle, Schneps, director of public policy of Foundry, underlined<\/a> that the initiative is singling out only one industry out of many operating on fossil fuels in the state, and the decentralized finance (DeFi) Education Fund emphasized<\/a> legislators\u2019 refusal to acknowledge the benefits of the industry. <\/p>\n The sponsor of the bill, environmental and housing rights activist Anna Kelles dismissed<\/a> these arguments in a Twitter discussion with the head of policy of Blockchain Association Jake Chervinsky. She pointed out that the bill is \u201cextremely narrow in scope\u201d and will only pertain to \u201clarge-scale crypto mining\u201d in power plants that use fossil-based energy sources. Moreover, the moratorium will apply only to mining operations at decommissioned power plants with the single aim of preventing the large-scale relaunch of such plants that could be incentivized by crypto mining profitability. By her estimate<\/a>, there are 49 such facilities in the State of New York. <\/p>\n As John Belizaire, CEO of green data center developer Soluna Computing, noted to Cointelegraph that the moratorium will certainly \u201chave a cooling effect\u201d on crypto mining in the state. He believes the state is taking a \u201cprudent action\u201d to study the issue of environmental effects as the growth of the industry has raised concerns about whether it is prolonging the life of legacy fuels rich with carbon:<\/p>\n \u201cWe\u2019d encourage the state to participate in open dialogue with forward-looking companies to learn how the crypto mining industry could accelerate New York\u2019s renewable energy development.\u201d<\/p><\/blockquote>\n John Warren, CEO of GEM Mining \u2014 which claims its 32,000 miners to be 97% carbon neutral \u2014 commented to Cointelegraph that the passage of this bill reveals that the New York legislature is \u201cdominated by radical and fringe elements\u201d who are \u201cignorant to a new and innovative sector of finance and technology.\u201d Warren said:<\/p>\n \u201cIt is no wonder why so many citizens and businesses are fleeing New York in order to pursue great opportunities in common sense business-friendly states. 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.\u201d<\/p><\/blockquote>\n The experts tend to agree on the possible effects of the bill beyond the boundaries of New York State. Warren is convinced that the issue represents a unique case of \u201ca radical outlier\u201d and hence will have little effect on the United States\u2019 role as the global leader in cryptocurrency mining:<\/p>\n \u201cWe\u2019ve recently seen the opposite as many legislators have openly encouraged crypto operations in their states and even gone so far as to enact legislation in favor of crypto. Take Georgia, for example.\u201d<\/p><\/blockquote>\n Belizaire also found it hard to name other states with similarly hostile policies toward miners. He brought up the example of North Dakota as a state that saw the job creation potential of crypto mining and chose to partner with the industry: <\/p>\n \u201cThe NY ban seems to send a unilaterally negative message even before a conversation takes place. Unfortunately, this emboldens the narrative that the PoW protocol is bad for the planet.\u201d<\/p><\/blockquote>\n Regardless of the vote\u2019s outcome, the New York moratorium is unlikely a case of a single state\u2019s allergy to crypto mining. Coming from an environmental activism background, Kelles repeatedly highlighted that her concern is for the possible influence on New York State\u2019s environment, not the crypto industry at large. It resembles a larger discussion about PoW mining that is happening on both national and international levels. <\/p>\n In October 2021, more than 70 NGOs have co-signed a letter to the U.S. Congress where they called legislators\u2019 attention to the numerous instances of fossil-fuel plants\u2019 relaunch across the country.<\/p>\n As Steve Wright, former general manager of Chelan County \u2014 Washington\u2019s public utility district \u2014 explained at the congressional hearing in January 2022, miners\u2019 interest in dormant fossil fuel facilities is driven by a simple market mechanism, which means there\u2019s no rational reason for them to stop exploring such possibilities. <\/p>\n In that sense, the environmental push from the New York State legislators is an instance of a larger discussion that will inevitably persist around crypto mining and fossil fuels. While the New York bill doesn\u2019t contain a single word about using renewable energy in mining, it could, in fact, incentivize the usage of green energy \u2014 Warren, who doesn\u2019t perceive this measure as proper, still admitted that such a possibility exists. <\/p>\n Belizaire commented:<\/p>\n \u201cI think the moratorium will have mining companies give a second thought to using fossil fuels to power their operations. New York\u2019s mission is clear: It\u2019s all in on renewables. PoW crypto mining needs to get on the bus.\u201d<\/p><\/blockquote>\n Crypto mining, he believes, could even become a \u201cspecial ingredient\u201d of the larger green energy shift.<\/p>\n <\/p>\n<\/div>\nA state affair <\/h2>\n
The future is green<\/h2>\n