On Friday, an early morning vote in Albany allowed New York lawmakers to pass a bill for banning all bitcoin mining operations that utilize power sources based on carbon. The bill will now make its way to the table of Governor Kathy Hochul, who will decide whether to veto the said legislation, or pass it into law. New York would become the first state in the United States to put a ban on the blockchain technology infrastructure, should the bill receive a green light from the governor. According to industry insiders, the law would also bring about a domino effect throughout the country.
The United States is home to about 38% of the miners in the crypto industry, putting it at the forefront of the bitcoin mining industry globally. Late April had seen the New York bill pass the State Assembly and make its way towards the State Senate. As per the rules, all crypto mining operations would be banned for two years, which depend on the proof-of-work (PoW) consensus for validating transactions on the blockchain. This mining method requires a great deal of sophisticated equipment and consumers significant amounts of energy. It is the method used for mining the world’s leading cryptocurrency, bitcoin.
While Ethereum is working on adopting a new protocol in the form of proof-of-stake (PoS), it is expected to continue using the PoW method for the next couple of months. There were some senators who had been undecided about the bill, but the leadership managed to convince them, leading to the vote at the eleventh hour. According to lawmakers who are in favor of the bill, they are aiming to reduce the carbon footprint of the state. Therefore, they have decided to launch a crackdown against all mining activity that uses electricity generated by burning fossil fuels.
If the law is passed, a mining company using the proof-of-work method would not be able to renew its permits or expand for two years. Similarly, new companies will not be able to enter the market, unless they decide to switch to renewable energy 100%. However, this would end up weakening the economy in New York as businesses would look for other avenues. Many believe that this could set a bad precedent. Furthermore, New York would not be able to become a leader in offering global financial services and technology. Plus, there is a lot of unbanked population in the state that would be denied financial access.
As far as timing is concerned, the bill would go into effect as soon as it is signed. A section of the bill also focuses on conducting a study to evaluate the environment impacts of mining operations via the proof-of-work method. The goal is to determine how this would impact the ability of the state when it comes to achieving the rather aggressive goals that were outlined in accordance with the Climate Leadership and Community Protection Act. The rules dictate that by 2050, New York needs to reduce its greenhouse gas emissions by 85%.