New York to Become First State in the Nation to Limit Cryptocurrency Mining Methods
ALBANY, N.Y. (WENY)-- New York is one signature away from becoming the first state in the nation to limit the methods used for cryptocurrency mining after state lawmakers worked into the morning to approve a two-year moratorium on facilities that use "behind the meter" energy generated by using carbon-based fuels for proof of work authentication.
The bill was passed in the Senate by a vote of 36 to 27. The measure has seen intense support from environmental activists and a large amount of opposition from the cryptocurrency industry.
Perianne Boring, CEO and Founder of the Digital Chamber of Commerce, said typically the policy process works by first understanding the industry and studying it before putting legislation in place but she said what's happening in New York right now, is the complete opposite.
“They are passing a bill that I don’t believe is well understood, the implications and risk of putting this forward before doing the work of really understanding exactly what proof-of-work mining is and how it's impacting the state,” said Boring.
Boring argues that the proof-of-work cryptocurrency model is helping lead a transition to renewable energy not only in the state of New York but across the country. Assemblywoman Dr. Anna Kelles, the sponsor of the cryptocurrency moratorium, disagrees.
“If we are doubling, 150% of our state usage, 200% of our state usage that's going to increase the amount of our renewable energy infrastructure, the amount that we are investing in the state in order to not only get our existing demand onto renewable but this huge added energy consumption onto renewable, “ said Kelles.
While this piece of legislation is known as the cryptocurrency moratorium bill, Kelles said the bill is simply saying to the cryptocurrency mining industry - that for two years, no new power plants will be allowed to generate their own power for the purpose of mining cryptocurrency, but smaller mining operations will not be affected.
“It allows [boutique mining operations] to have a more even playing field in an environment that is becoming rapidly consolidated by large-scale corporations,” said Kelles.
Boring is urging the governor to veto the cryptocurrency moratorium. She tells WENY she is in support of a similar bill that has passed both the Senate and the Assembly, bill A9275 which would “establish a state cryptocurrency and blockchain study task force to provide the governor and the legislature with information on the effects of the widespread use of cryptocurrencies and other forms of digital currencies and their ancillary systems, including but not limited to blockchain technology, in the state.”
“We do support that bill because it first allows the state to convene a task force and do a study on the impacts of proof-of-work mining plus other cryptocurrency operations in the state and make recommendations and then take action,” said Boring.
Yvonne Taylor, Vice President of the Seneca Lake Guardian, along with environmental advocates, has been leading the charge in the fight against proof-of-work cryptocurrency mining using these methods. She argues that wealthy out-of-state speculators are invading our communities to destroy our natural resources, kneecap local businesses, and keep us from meeting the crucial climate goals outlined by the CLCPA and while she is happy that the bill was passed by the legislature, she would like to see more done.
"Instead of cowering to crypto-mining cash, Governor Hochul must follow the legislature's lead by signing this bill into law and then denying Greenidge Generation's air permit renewal," said Taylor.
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Even though Assemblywoman Kelles argues that the cryptocurrency moratorium is not meant to drive industry out of New York state, Boring feels that whether intentional or not, it will happen.
“Once a moratorium is put in place essentially what we expect to see is the entire Bitcoin mining industry, at least those that will be directly impacted by this, will have to shutter their operations and they will probably never return,” said Boring.
Cryptocurrency advocates also worry that New York’s moratorium will inspire other states across the nation to follow in its footsteps.
Liz Moran, New York Policy Advocate for Earthjustice said the cryptocurrency industry has been touting how green and environmentally friendly their operations are and she said now is the time to stop talking and start doing.
"What is the problem with this bill," said Moran. " They should walk the talk here, they keep saying they are going to bring renewables online and that they are a green industry, so let's see it, they should support this bill."
While the cryptocurrency moratorium bill was meant to target operations similarly to that of Greenidge Generation, which operates a Bitcoin mining facility at its natural gas power plant in Dresden, this bill will not affect their operation.
Greenidge issued a statement after the legislation's passage on Friday. It says:
"Specifically, Section 7 of the bill text reads: ‘This act shall take effect immediately and shall apply to all permits or renewal applications filed after such date.’ “Greenidge’s renewal application was filed on March 5, 2021, and the application was formally recognized by the New York State Department of Environmental Conservation in 2021. Greenidge’s New York facility would therefore not be impacted by this bill.”