The state of New York’s Bitcoin mining boom has encountered a snag, with the State Senate passing a bill that would put a stop to new licenses for certain fossil-fuel power plants used in Bitcoin mining. The bill, which also calls for an assessment of the state’s mining operations’ environmental effect, was enacted by the State Assembly earlier this year.
The crypto business, which promised new employment, has divided Senate Democrats over whether the moratorium would have bigger environmental or economic repercussions. As the State Senate approached its legislative deadline, discussions continued until late in the evening.
The law will be put to another test when it is presented to Governor Kathy Hochul for her signature or veto. According to The New York Times, Hochul got a $40,000 payment from the CEO of a business that owns a former aluminum mill turned crypto-mining operation last month.
Many mining businesses have set up shop in the United States after China imposed tighter limits on bitcoin mining last year. New York swiftly became a new Bitcoin mining hotspot, thanks to ample hydroelectricity and abandoned fossil fuel facilities that can be revived to mine Bitcoin.
Some people and environmentalists have reacted negatively to the revival of fossil fuels. They are concerned that, with Bitcoin’s support, reborn fossil fuel facilities would harm ecosystems and hinder the state’s attempts to combat climate change.
The measure that passed today places a two-year freeze on new licences for cryptocurrency mining companies that utilize a particularly energy-intensive technique to validate blockchain transactions. The method, known as proof-of-work, is at the heart of the two most popular cryptocurrencies, Bitcoin and Ethereum.
Proof-of-work requires “miners” to solve tough riddles using dedicated technology in exchange for crypto currency. The procedure consumes a significant amount of energy. If the Bitcoin network were a country, it would be ranked 32nd in the world in terms of yearly power consumption (just after Argentina and the Netherlands).
This increased energy consumption jeopardizes New York State’s climate targets, which include an 85 percent decrease in greenhouse gas emissions by 2050.
The Greenidge Generating Station in New York’s Finger Lakes area has become a hotspot for citizens concerned about the environmental impact of bitcoin mining. Greenidge began as a coal-fired power station before being transformed to an almost full-time Bitcoin mining facility in 2020.
Greenidge is exempt from the Bitcoin mining embargo since it pertains to fossil fuel power plants submitting fresh applications for permission to utilize electricity to mine proof-of-work based cryptocurrency rather than transmitting it to the grid. The measure also has no effect on operations that utilize renewable energy or a less energy-intensive alternative to proof-of-work, which is used by many other cryptocurrencies to validate transactions.