New York will instate a two-year moratorium on new fossil fuel-powered cryptocurrency mining operations as the state works to balance its economic development and climate goals, Politico reported.
According to Politico, Governor Kathy Hochul on Tuesday signed the controversial measure into law that would create the first-in-the-nation temporary pause on new permits for fossil fuel power plants that house proof-of-work cryptocurrency mining, which is a process used in the transaction of digital money. Hochul, who had punted on the issues for months after the Legislature passed the bill in June, was elected to a full term Nov. 8.
Upstate New York has become attractive to companies that “mine” digital currencies, including Bitcoin, because of the availability of former power plants and manufacturing sites with unused electrical infrastructure, Politico reported. But, Governor Hochul said that the moratorium is an important step to avoid increased emissions from the industry restarting old power plants as she guides the state toward ambitious climate goals.
Politico also reported that the new law will trigger a study by state Department of Environmental Conservation to study the impacts of the cryptocurrency mining industry on the environment.
The bill is narrow in scope, Politico reported, despite its groundbreaking steps. The state’s roughly dozen operations that draw power from the grid would not be affected, nor would individuals purchasing or mining for cryptocurrency or other blockchain activities. And the moratorium on new or renewed permits doesn’t apply if the company has already filed paperwork to operate in New York.
The Wall Street Journal reported that New York has become the first state to restrict cryptocurrency mining after Gov. Kathy Hochul on Tuesday signed a two-year moratorium, calling the move necessary to help protect the environment.
According to The Wall Street Journal, sustainability groups generally object to cryptocurrency mining because of its intensive energy use and resulting environmental impacts. Business groups – including cryptocurrency companies – lobbied Ms.Hochul to veto the bill, which lawmakers approved in June. The groups argued it would have an effect on the industry’s growth in the state, and said the power plants are also a source of jobs in upstate communities.
The Wall Street Journal also reported that more than 160 crypto-related bills are up for consideration this year in 37 states, according to the National Conference of State Legislatures.
The Hill reported that the restrictions came after the collapse of cryptocurrency exchange FTX, which has led to growing scrutiny of the industry.
According to The Hill, the New York law takes aim at the technology’s environmental impact, establishing a two-year moratorium on permits for fossil fuel plants used for cryptocurrency mining that requires “proof-of-work authentication.”
The law has been described as a first-of-its kind. To me, this indicates that other state governors could potentially sign a similar bill (assuming their state legislature creates one that is similar to the New York law). I suspect that the FTX situation could influence legislation that would move to prevent that sort of thing from happening again.