03 Jun What Does the Bitcoin Mining Moratorium Means for New York?
Mining of Proof-of-Work (PoW) has hit a major roadblock as New York lawmakers passed a bill that bans certain mining operations that rely on carbon-based power sources.
What’s at Stake?
The bill calls for a two-year moratorium on certain cryptocurrency mining operations which use PoW(Proof of Work) authentication. If it passes, PoW-based mining companies won’t be allowed to expand their businesses for two years unless they switch to 100% renewable energy. These entities won’t be able to renew permits as well for the same period. The new market entrants, on the other hand, would not be allowed to establish their base.
The bill was first passed by the state assembly in April. A month later, it garnered 36-27 approval from the members of the New York State Senate. According to those backing it, the main idea is to lower New York’s carbon footprint by cracking down on mining firms that use electricity from power plants that burn fossil fuels. The bill is now headed to New York Governor Kathy Hochul’s desk, who could sign or veto it.
It all started after China imposed fresh restrictions on Bitcoin mining last year. Subsequently, several mining operators have set up shops across the globe, looking for friendlier jurisdictions. With abundant hydroelectricity and retired fossil fuel plants that can be revived to mine Bitcoin, New York rapidly cemented its position as a new hub for PoW mining.
It was this resurgence that triggered a significant backlash from residents as well as environmental advocates that are worried about the network’s energy consumption.
The bill has been met with vehement opposition by the cryptocurrency players. Many believe that if it becomes a law, New York will lose out on the opportunities Bitcoin mining offers for economic growth and the proliferation of renewable energy. While others argue that the bill will set a precedent for states across the country, triggering a domino effect. Some, such as prominent investor Kevin O’Leary even went so far to call the state uninvestable.
Currently, the US hosts 38% of all Bitcoin miners in the world. Hence, an abrupt transition to 100% green energy can be challenging.
Interestingly, as New York passed a two-year moratorium on new Bitcoin mining facilities – elsewhere in Kenya, KenGen has announced plans that it is looking to provide its surplus geothermal energy to Bitcoin miners.