New York’s Latest Bill Clamping Down On Bitcoin Mining Draws Sharp Criticism From Industry
2022年6月21日 - 8:57PM
NEWSBTC
While many states across the US are leaving no stones unturned to
entice crypto mining companies to set up shop in their respective
jurisdictions, New York’s lawmakers are moving in the opposite
direction. As the NY State Legislature entered the eleventh hour of
its 2022 session, an early morning vote in Albany on Friday passed
a bill that potentially will impose a strict 2-year ban on all new
crypto mining permits. The bill also intends to ban certain
existing mining operations that run on carbon-based power sources,
primarily set-ups repurposing fossil-fuel burning plants. After
being passed by the Assembly in April, the bill languished in the
Senate for weeks until it was unexpectedly brought back to life and
passed just before the Senate adjourned on Friday morning. The
Democrat-controlled state Senate is expected to take up the matter
shortly before the bill lands on the desk of Governor Kathy Hochul,
who will determine its fate. NY lawmakers backing the legislation
have also provided their reasons behind this sudden move. They have
clarified that this is being done to curb New York’s carbon
footprint by cracking down on mining companies, especially those
employing non-renewable resources. Unless a proof-of-work (PoW)
mining company can show evidence that they are using 100% renewable
energy, they wouldn’t be allowed to expand or renew their permits.
A Draconian Law Or A Well-Thought Move? While the top brass
continues to back their decision, this unexpected move has drawn
sharp criticism from the crypto community. According to Narek
Gevorgyan, CEO & Founder of CoinStats, “I’m unsurprised that
New York politicians would take a stand against proof-of-work
mining, similar to their European peers, but the New York bill
epitomizes virtue signaling. I understand that New York has
outlined aggressive goals to reduce reliance on fossil fuels, but
conflating the matter with mining is short-sighted.” Gevorgyan
stresses, “Not only will this make proof of work mining firms more
reluctant to do business in New York, but it will also directly
impact the state’s tax coffers. Miners are voting with their feet
by moving to friendlier jurisdictions, and the state has already
lost considerable revenues by advancing this rather draconian
regulation.” Following China’s clampdown on crypto mining, New York
has emerged as a major mining hub. This has led to a sharp rise in
the “revival” of broken-down coal mines and low-cost natural gas
use as miners experiment with alternatives to power the
energy-intensive mining rigs. Mining companies across New York have
set up in former power plants shuttered due to inefficiency, carbon
emissions, and power consumption. Restarting and repurposing these
plants reverses the reductions in greenhouse gas emissions that the
shutdowns had achieved thus far. As a result, NY’s progress on
meeting its climate goals – at least the limit it is legally bound
to meet – has slowed significantly. In this context, the bill, if
passed, may help NY to get close to, if not achieve, its climate
goals. But there are serious repercussions as well. Crypto industry
leaders aren’t very supportive of the bill, primarily because they
believe that if Governor Hochul signs it into law, it will
influence regulations in other states and even at the federal
level. Meanwhile, miners feel that this move by New York lawmakers
will backfire because miners will start moving out to other states,
thereby weakening NY’s economy significantly. Vincent Hung, Head of
Marketing Communications at ParallelChain Lab, points out, “New
York state has not been a place where the mining sector is
significant. Even with China’s outright ban on mining last year,
Bitcoin’s hash rate recovered pretty quickly. The major impact
anticipated from this potential ban would be the existing
operations in New York being driven to other states, and the impact
will persist even after the ban is lifted in 2 years.” He adds,
“The environmental cost of mining is a known problem, hence the
popularization of Proof-of-Stake. Yet, a notable variant can be
seen in the energy consumption of the many variations of
Proof-of-Stake. Being sustainable is an ongoing process, which
means PoS protocols should be held to increasingly higher standards
of energy efficiency.” The latest data from Foundry indicates that
New York’s share of the crypto mining market dropped from 20% to
10% since the bill was first floated in April. This happened
because large mining companies started moving out to more
crypto-friendly jurisdictions in other parts of the US. From a
miner’s perspective, New York provides the best conditions to mine
cryptocurrencies using cheap power sources. NY produces more
hydroelectric power than any other state east of the Rocky
Mountains and generates about one-third of its electricity from
renewable sources. The state’s chilly climate makes it easy to cool
the rigs employed in crypto mining. On top of that, considerable
abandoned industrial infrastructure is available for reuse. Yes,
New York does feature zealous climate goals set out by the Climate
Leadership and Community Protection Act, requiring it to cut
greenhouse gas emissions by 85% by 2050. That said, since most of
NY’s power is generated from renewable energy, isn’t the idea of
outright banning mining operations a bit extreme? Instead, NY
lawmakers should consider how Kenyan energy company KenGen is
enticing miners to use its excess renewable power. The company
claims that 86% of its energy is generated from renewable sources,
primarily from the geothermal pockets scattered across the Great
Rift Valley. New York is already generating one-third of its
electricity from renewables. As such, it can create new laws that
attract miners, not laws that repel them. Adrián Eidelman, RSK’s
Head of Strategy & Co-founder at IOV Labs, argues, “Bitcoin is
an energy scavenger looking for the cheapest available resources
such as hydro, geothermal, and wind, in remote locations far from
large urban areas. For this reason, Bitcoin mining is proving to be
much cleaner than the industry standard. It also generates
incentives for developing new renewable energy sources as it
operates as a subsidy until distribution lines are built. Bitcoin
is creating the demand for green energy today until there is demand
from cities that justifies high prices to cover transmission
costs.” He explains, “A Bitcoin mining ban will only prevent
renewable-energy miners from running operations in the state, while
the best way to discourage carbon-based power sources is to
subsidize green mining. In the end, if the bill is approved, it
will only force mining businesses to take jobs to more Bitcoin
regulatory-friendly regions, in the US or abroad. Last and most
important, New York’s Bitcoin mining ban is extremely dangerous as
it creates a precedent where governments intervene to tell society
in which use cases energy is allowed to be used. If this trend
continues, it could lead us to all kinds of dystopian situations.”
The long-term implications of this bill are yet to be seen. That
said, if NY Governor Hochul signs the bill into law, it might
trigger a ripple effect that may impact mining activities across
the US, pushing other crypto-friendly jurisdictions to follow suit.
Moreover, the consequences won’t just be limited to mining
companies. It will potentially stifle investments across
sustainable energy resources, drive local vendors (electricians,
construction workers, IT employees, etc.) out of work, and even
lead to serious “taxable income” figures moving out of the state.
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