On April 26, New York State took the lead in regulating cryptography, as its Assembly voted in favor of a two-year moratorium on cryptographic mining operations that use energy generated by fossil fuel power plants. Depending on how you look at it, this development could signal an alarming new legislative trend or a trigger that would accelerate the movement of the digital asset industry toward a more sustainable path.
Moratorium with subsequent evaluation
The lower house of the New York State legislature, the Assembly, passed a bill that would suspend for two years any new mining operation through the working test consensus mechanism (PoW), as well as the renewal of existing permits. .
The bill, S6486D / A7389C, is being marketed by its sponsors as a necessary act of compliance with the 2019 Climate Leadership and Community Protection Act and aims to reduce greenhouse gas emissions by 40% by 2030. project also requires a “generic environmental impact.” statement ”by the Department of Environmental Conservation (DEC), which will assess the energy consumption and greenhouse gas emissions of PoW miners and their impact on public health.
The next bill is a vote in the upper house, the state Senate, after which, if passed, it would pass to Governor Kathy Hochul, who can veto it or sign it as law.
The Blockchain Association advocacy group cre that the “anti-technology” bill can still sink into the Senate. The heated debate in the Assembly lasted for three hours, and the vote was far from unanimous: 95 in favor, 52 against.
A matter of state
The passage of the bill has caused alarm in the cryptographic community. The Crypto Council for Innovation shared a concern that the initiative may put innovation in the background. Kyle, Schneps, Foundry’s Director of Public Policy, underlined that the initiative is pointing to just one industry out of many operating with fossil fuels in the state and the Decentralized Finance Education Fund (DeFi). he pointed out refusal of lawmakers to recognize industry benefits.
Bill sponsor, environmental and housing rights activist Anna Kelles fired these arguments in a discussion on Twitter with the head of policy of the Blockchain Association, Jake Chervinsky. She noted that the bill is “extremely narrow” and will only refer to “large-scale cryptography” in power plants that use fossil-based power sources. In addition, the moratorium will apply only to mining operations in dismantled power plants with the sole purpose of preventing the large-scale relaunch of these plants that could be encouraged by the profitability of cryptographic mining. For her estimatethere are 49 such facilities in New York State.
As John Belizaire, CEO of green data center developer Soluna Computing, told Cointelegraph that the moratorium will certainly “have a refreshing effect” on cryptographic mining in the state. He believes the state is taking “prudent action” to study the issue of environmental effects as the growth of the industry raises concerns about whether it is extending the shelf life of carbon-rich legacy fuels:
“We would encourage the state to engage in an open dialogue with forward-looking companies to learn how the cryptographic mining industry could accelerate the development of New York’s renewable energy.”
John Warren, CEO of GEM Mining, which claims that its 32,000 miners are 97% carbon neutral, told Cointelegraph that the passage of this bill reveals that the New York legislature is “dominated by radical and marginal elements” that are “Ignorant of a new, innovative sector of finance and technology,” Warren said.
“It’s no wonder so many citizens and businesses are fleeing New York to look for great opportunities in business-friendly common sense states. As a graduate of New York University and someone who loves New York, it’s painful to see how the state implements policies that reflect China and Russia. “
The future is green
Experts tend to agree on the possible effects of the bill beyond the boundaries of New York State. Warren is convinced that the problem represents a unique case of “radical atypical value” and will therefore have little effect on the role of the United States as a world leader in cryptocurrency mining:
“We’ve seen the opposite recently, as many lawmakers have openly encouraged cryptographic operations in their states and even enacted legislation in favor of cryptography. Take Georgia, for example.
Belizaire also found it difficult to name other states with equally hostile policies toward miners. He cited the example of North Dakota as a state that saw the job creation potential of cryptographic mining and chose to partner with the industry:
“The New York ban seems to send a unilaterally negative message even before a conversation takes place. Unfortunately, this encourages the narrative that the PoW protocol is bad for the planet.
Regardless of the outcome of the vote, the New York moratorium is unlikely to be a case of a one-state allergy to cryptographic mining. Coming from an environmental activism fund, Kelles has repeatedly stressed that his concern is the possible influence on the New York State environment, not the crypto industry in general. It seems like a broader discussion of the PoW mining that is happening nationally and internationally.
In October 2021, more than 70 NGOs signed a letter to the United States Congress drawing the attention of lawmakers to the numerous cases of relaunching fossil fuel plants across the country.
As Steve Wright, former director general of Chelan County, Washington’s public service district, explained at a congressional hearing in January 2022, miners’ interest in inactive fossil fuel facilities is driven by a simple market mechanism, the which means that there are no rational reasons for you to stop exploring such possibilities.
In that sense, the environmental momentum of New York State lawmakers is an example of a broader discussion that will inevitably persist around cryptographic mining and fossil fuels. While the New York bill does not contain a single word about the use of renewable energy in mining, it could, in fact, encourage the use of green energy. exists.
“I think the moratorium will make mining companies think about using fossil fuels to boost their operations. New York’s mission is clear: it’s all about renewable energy. PoW cryptographic mining has to get on the bus.”
Cryptographic mining, he believes, could even become a “special ingredient” in the larger green energy shift.