Cryptocurrency mining companies have been feeling the pinch this year amid the dropping crypto prices and the high electricity prices. These companies are now facing another hurdle, as New York has restricted cryptocurrency mining activities in the state.
New York bans crypto mining
The governor of New York, Kathy Hochul, has signed legislation that bans cryptocurrency mining in the state, which makes it the first US state to crack down on crypto mining activities.
The legislation signed by the New York governor focuses on the environment. It imposes a two-year ban on the new and renewed air permits or power plants using fossil fuel to mine cryptocurrencies that rely on the proof-of-work consensus, including Bitcoin.
The Department of Environmental Conservation will also be tasked with into how cryptocurrencies harm the efforts of the government to mitigate the effects of climate change. The bill Hochul approved was passed in June, and it has only now been signed into law.
A report by The Hill says that the New York governor had not committed to signing this bill into law during a pre-election debate in October. Lee Zeldin, her main opponent in the election, said that he would not sign the bill into law if elected as the state’s governor.
Concern over crypto mining effects on the environment
Political and environmental groups have been raising concerns about cryptocurrency mining activities. These groups have previously said that coins that use the proof-of-work consensus are energy-intensive. Bitcoin, which relies on a proof-of-work algorithm, depends on energy-intensive computer processes to secure the network.
On the other hand, the cryptocurrency sector has been trying to address the energy demands of PoW systems. For example, Ethereum, the second-largest cryptocurrency by market capitalization, completed the Merge on September 15. The Merge is a process that saw the Ethereum network switch from a proof of work to a proof-of-stake consensus that uses less energy.
It remains to be seen whether other states will follow suit and impose similar bans. Texas has become a primary hub for Bitcoin mining activities, with miners moving to the state to access its abundance of renewable energy. Democrat senators have been pressuring the state to address the energy demands of crypto miners, but the state government has yet to budge.
The cryptocurrency community is already reacting to the action of New York to ban crypto mining. The Chamber of Digital Commerce has said that the law sets a “dangerous precedent,” adding that PoW mining was crucial for economic growth. The passing of this law could see crypto miners in the state migrate to other cities that have more friendly regulations.
The USA is currently the largest Bitcoin mining hub. The country scooped the top position after China banned crypto mining in mid-2021. Miners migrated to the US to seek access to wind and solar energy. However, the changing regulatory framework could force miners to relocate from the country as they seek other locations to set up their mining rigs.
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