New York just passed a bill to crack down on bitcoin mining
6/4/2022, 11:18 PM
The bill is due to a confluence of factors, including the rise in bitcoin's price, which has caused an increase in mining activity, and the power outages caused by last week's winter storm in Texas. The power outages, which were caused by a failure to properly winterize the state's power grid, led to widespread blackouts and an increase in the price of electricity.
In the wake of the storm, some lawmakers and environmentalists have called for a moratorium on bitcoin mining, which they say is a strain on the state's power grid. Boring says the bill is a way to address those concerns."This bill is a way to put a moratorium on bitcoin mining until we can figure out how to make it more sustainable," Boring says. "It's not a ban, it's a timeout."The bill's sponsor, State Senator Kevin Parker, said in a statement that the legislation is "a first-in-the-nation effort to ensure that as we transition to renewable energy, our power grid is not further strained by cryptocurrency mining." New York State lawmakers have passed a bill to ban certain bitcoin mining operations that run on carbon-based power sources. The measure now heads to the desk of Governor Kathy Hochul, who could sign it into law or veto it.
If Hochul signs the bill, it would make New York the first state in the country to ban blockchain technology infrastructure, according to Perianne Boring, founder and president of the Chamber of Digital Commerce. Industry insiders also tell CNBC it could have a domino effect across the U.S., which is currently at the forefront of the global bitcoin mining industry, accounting for 38% of the world's miners.
The New York bill, which previously passed the State Assembly in late April before heading to the State Senate, calls for a two-year moratorium on certain cryptocurrency mining operations which use proof-of-work authentication methods to validate blockchain transactions. Proof-of-work mining, which requires sophisticated gear and a whole lot of electricity, is used to create bitcoin. Ethereum is switching to a less energy-intensive process, but will still use this method for at least for another few months.
The push for an eleventh-hour vote came as leadership in the state capitol managed to flip some of the senators who were previously undecided.
Lawmakers backing the legislation say they are looking to curb the state's carbon footprint by cracking down on mines that use electricity from power plants that burn fossil fuels. If it passes — for two years, unless a proof-of-work mining company uses 100% renewable energy, it would not be allowed to expand or renew permits, and new entrants would not be allowed to come online.
The net effect of this, according to Boring, would be to weaken New York's economy by forcing businesses to take jobs elsewhere.
"This is a significant setback for the state and will stifle its future as a leader in technology and global financial services. More importantly, this decision will eliminate critical union jobs and further disenfranchise financial access to the many underbanked populations living in the Empire State," Boring tells CNBC.
It is a sentiment echoed by Galaxy Digital's Amando Fabiano, who says that "New York is setting a bad precedent that other states could follow." As for timing, the law would go into effect as soon as the governor signs off.
In the wake of the storm, some lawmakers and environmentalists have called for a moratorium on bitcoin mining, which they say is a strain on the state's power grid. Boring says the bill is a way to address those concerns."This bill is a way to put a moratorium on bitcoin mining until we can figure out how to make it more sustainable," Boring says. "It's not a ban, it's a timeout."The bill's sponsor, State Senator Kevin Parker, said in a statement that the legislation is "a first-in-the-nation effort to ensure that as we transition to renewable energy, our power grid is not further strained by cryptocurrency mining." New York State lawmakers have passed a bill to ban certain bitcoin mining operations that run on carbon-based power sources. The measure now heads to the desk of Governor Kathy Hochul, who could sign it into law or veto it.
If Hochul signs the bill, it would make New York the first state in the country to ban blockchain technology infrastructure, according to Perianne Boring, founder and president of the Chamber of Digital Commerce. Industry insiders also tell CNBC it could have a domino effect across the U.S., which is currently at the forefront of the global bitcoin mining industry, accounting for 38% of the world's miners.
The New York bill, which previously passed the State Assembly in late April before heading to the State Senate, calls for a two-year moratorium on certain cryptocurrency mining operations which use proof-of-work authentication methods to validate blockchain transactions. Proof-of-work mining, which requires sophisticated gear and a whole lot of electricity, is used to create bitcoin. Ethereum is switching to a less energy-intensive process, but will still use this method for at least for another few months.
The push for an eleventh-hour vote came as leadership in the state capitol managed to flip some of the senators who were previously undecided.
Lawmakers backing the legislation say they are looking to curb the state's carbon footprint by cracking down on mines that use electricity from power plants that burn fossil fuels. If it passes — for two years, unless a proof-of-work mining company uses 100% renewable energy, it would not be allowed to expand or renew permits, and new entrants would not be allowed to come online.
The net effect of this, according to Boring, would be to weaken New York's economy by forcing businesses to take jobs elsewhere.
"This is a significant setback for the state and will stifle its future as a leader in technology and global financial services. More importantly, this decision will eliminate critical union jobs and further disenfranchise financial access to the many underbanked populations living in the Empire State," Boring tells CNBC.
It is a sentiment echoed by Galaxy Digital's Amando Fabiano, who says that "New York is setting a bad precedent that other states could follow." As for timing, the law would go into effect as soon as the governor signs off.