New York’s latest bitcoin mining bill is heavily criticized by the industry

While many states across the U.S. have gone to great lengths to entice crypto mining companies to set up shop in their respective jurisdictions, lawmakers in New York are moving in the opposite direction.

Early morning vote in Albany on Friday as New York State Legislature enters final hour of 2022 session Bill likely to impose strict 2-year ban All new crypto mining licenses. The bill also intends to ban certain existing carbon-based mining operations, primarily repurposing fossil fuel-burning plants.

After the bill passed parliament in April, it stalled in the Senate for weeks until it unexpectedly came back to life and passed before the Senate adjourned Friday morning. The Democratic-controlled state Senate is expected to take up the matter shortly before the bill goes to Gov. Kathy Hochul’s desk, who will decide its fate.

New York state lawmakers who backed the legislation also provided the reasons behind the sudden move. They clarified that this was done to curb New York’s carbon footprint by cracking down on mining companies, especially those using non-renewable resources. Unless proof-of-work (PoW) mining companies can demonstrate that they are using 100% renewable energy, they will not be allowed to expand or renew their licenses.

Harsh laws or deliberate moves?

The unexpected move drew heavy criticism from the crypto community, even as high-level officials continued to support their decision.

According to CEO and founder Narek Gevorgyan Coin Statistics, “I’m not surprised that New York politicians are as opposed to proof-of-work mining as their European counterparts, but New York’s bill epitomizes virtue signaling. I know New York has aggressive goals to reduce its reliance on fossil fuels, but compare this to The conflation of mining is short-sighted.”

Gevorgyan emphasized, “Not only will this make proof-of-work mining companies more reluctant to do business in New York, but it will directly affect the state’s tax bill. Miners are voting by moving to friendlier jurisdictions, and by advancing this rather draconian Regulation, the state has lost significant revenue.”

New York has emerged as a major mining hub as China clamps down on crypto mining.This has led to a sharp rise in house prices Broken coal mines and cheap natural gas ‘renaissance’ Use alternatives as miners to power energy-intensive mining equipment.

Mining companies across New York have set up factories in previously closed power plants because of inefficiencies, carbon emissions and electricity consumption. Restarting and repurposing these plants could reverse the reductions in greenhouse gas emissions achieved so far from closures. therefore, New York’s Progress on its Climate Goals – at least the limit it legally has to meet – has slowed down significantly. In this case, the bill, if passed, could help New York get close to, if not meet, its climate goals.

But there are also serious consequences.

Crypto industry leaders are less supportive of the bill, mainly because they believe that if Governor Hochul signs it into law, it will affect regulations in other states and even at the federal level. At the same time, miners believe the move by New York lawmakers will backfire as miners will start moving to other states, significantly weakening New York’s economy.

Vincent Hung, Head of Marketing Communications Parachain Labpoints out, “New York State is not a very important place for mining. Even with China’s blanket ban on mining last year, Bitcoin’s hash rate recovered quickly. The main impact of this potential ban is expected to be to move existing operations in New York to other state, even if the ban is lifted within 2 years, the impact will persist.”

He added, “The environmental cost of mining is a well-known issue, hence the popularity of proof-of-stake. However, a notable variant can be seen in the energy consumption of many variants of proof-of-stake. Sustainability is an ongoing process, which Means that PoS protocols should adhere to higher and higher energy efficiency standards.”

The latest data from Foundry shows that, New York’s share of crypto mining market drops from 20% to 10% Since the bill was first introduced in April. This happened as large mining companies began to move to more crypto-friendly jurisdictions in other parts of the United States.

From a miner’s perspective, New York offers the best conditions for mining cryptocurrencies using cheap energy.New York produces more hydroelectric power more than any other state east of the Rocky Mountains and produces approximately One third of electricity comes from renewable energy. The cold climate of the state makes it easy for the rigs used in crypto mining to cool down. On top of that, a lot of abandoned industrial infrastructure is available for reuse.

Yes, New York does have zealous climate goals set by the Climate Leadership and Community Protection Act, requiring it to reduce greenhouse gas emissions by: 85% by 2050That said, since most of New York’s electricity is generated from renewable sources, isn’t the idea of ​​completely banning mining operations a bit extreme?

Instead, New York lawmakers should consider how Kenyan energy company KenGen can entice miners to use its surplus of renewable energy.The company claims 86% of its energy comes from renewable sources, mainly from geothermal pockets scattered in the Great Rift Valley of East Africa. New York already gets one-third of its electricity from renewable sources. So it can create new laws that attract miners, not laws that exclude them.

According to Adrián Eidelman, head of strategy at RSK and co-founder of IOV Labs, “Bitcoin is an energy scavenger, finding the cheapest available resources, such as hydro, geothermal, and wind, in remote areas away from large urban areas. For this reason, Bitcoin mining has proven to be much cleaner than industry standards It also provides incentives to develop new renewable energy as it operates as a subsidy until distribution lines are built. Today, Bitcoin is creating demand for green energy until demand in cities justifies high prices to cover transmission costs of.”

He explained, “The Bitcoin mining ban will only stop renewable energy miners from doing business in the state, and the best way to stop carbon-based energy is to subsidize green mining. In the end, if the bill is approved, it will only force mining companies to shift jobs Go to areas in the U.S. or abroad that are more Bitcoin-friendly. Last and foremost, the Bitcoin mining ban in New York is very dangerous because it sets a precedent for government intervention to tell society in which use cases energy is allowed. If this If this trend continues, it could lead us into all kinds of dystopian situations.”

The long-term impact of the bill remains to be seen. That said, if New York Governor Hochul signs the bill into law, it could set off a chain reaction that could impact mining across the U.S., pushing other crypto-friendly jurisdictions to follow suit. Moreover, the consequences are not limited to mining companies. It could stifle investment in sustainable energy sources, put local suppliers (electricians, construction workers, IT staff, etc.) out of work, and even cause serious “taxable income” figures to move out of the state.

Source link