Go green or go home? What the NY State mining moratorium could mean for crypto industry

On April 26, the State of New York came to the forefront of the regulatory fight with cryptocurrencies, as its Assembly voted for a two-year moratorium on crypto mining operations that use energy generated by power plants. fossil fuels. Depending on how you look at it, this development could indicate an alarming new legislative trend or a trigger that would accelerate the movement of the digital asset industry onto a more sustainable path.

Moratorium with additional evaluation

The lower house of the New York state legislature, the Assembly, passed a bill that would suspend for two years any new mining operations that use the proof-of-work (PoW) consensus mechanism, as well as the renewal of permits. existing. .

The bill, S6486D/A7389C, is marketed by its sponsors as a necessary act of compliance with the Climate Leadership and Community Protection Act of 2019 and its goal of reducing greenhouse gas emissions by 40% by 2030. The bill also requires a “generic environmental impact.” statement” to be made by the Department of Environmental Conservation (DEC), which must assess the energy consumption and greenhouse gas emissions of PoW miners and their impact on public health.

The next step for the bill is a vote in the upper house, the state Senate, after which, if it passes, it would go to Gov. Kathy Hochul, who can veto it or sign it into law.

The Blockchain Association advocacy group believe that the “anti-tech” bill may still sink in the Senate. The heated debate in the Assembly lasted three hours and the vote ended up being far from unanimous: 95 in favor, 52 against.

a matter of state

The passage of the bill caused an alarm in the crypto community. The Crypto Council for Innovation shared a concern that the initiative could put innovation on the back burner. Kyle, Schneps, director of public policy for the Foundry, underlined that the initiative is highlighting just one of many fossil-fueled industries in the state, and the decentralized finance (DeFi) Education Fund emphasized the refusal of legislators to recognize the benefits of the industry.

The bill’s sponsor, housing and environmental rights activist Anna Kelles fired these arguments in a Twitter discussion with the Blockchain Association’s chief policy officer, Jake Chervinsky. He noted that the bill is “extremely limited in scope” and will only address “large-scale crypto mining” at power plants that use fossil-based energy sources. Furthermore, the moratorium will apply only to mining operations at decommissioned power plants with the sole aim of preventing large-scale relaunch of such plants that could be incentivized by the profitability of crypto mining. For her estimatethere are 49 such facilities in New York State.

As John Belizaire, CEO of green data center developer Soluna Computing, noted to Cointelegraph, the moratorium will certainly “have a chilling effect” on crypto 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 has raised concerns about whether it is prolonging the life of carbon-rich legacy fuels:

“We encourage the state to engage in an open dialogue with forward-thinking companies to learn how the crypto mining industry could accelerate New York’s renewable energy development.”

John Warren, CEO of GEM Mining, which claims 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 fringe elements” that they are “ignorant to some extent”. new and innovative sector of finance and technology”. Warren said:

“It’s no wonder why so many citizens and businesses are fleeing New York to seek great opportunities in common-sense business-friendly states. As a New York University graduate and someone who loves New York, it’s painful to see the state implement policies that mirror China and Russia.”

the future is green

Experts tend to agree on the possible effects of the bill beyond the borders of New York state. Warren is convinced that the issue represents a unique case of “a radical outlier” and will therefore have little effect on the role of the United States as the world leader in cryptocurrency mining:

“Recently we have seen the opposite, as many lawmakers have openly encouraged cryptocurrency trading in their states and have even gone so far as to enact pro-cryptocurrency laws. Take Georgia, for example.”

Belizaire also found it difficult to name other states with similarly hostile policies toward miners. He mentioned the example of North Dakota as a state that saw the job creation potential of crypto mining and chose to partner with the industry:

“The New York ban seems to send a one-sidedly negative message even before a conversation takes place. Unfortunately, this emboldens 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 single state allergy to crypto mining. With a background in environmental activism, Kelles has repeatedly highlighted that his concern is about the potential influence on the New York state environment, not the crypto industry in general. He parallels a broader discussion of PoW mining that is happening both nationally and internationally.

In October 2021, more than 70 NGOs co-signed a letter to the US Congress drawing the attention of lawmakers to the numerous instances of fossil fuel plant restarts across the country.

As Steve Wright, former general manager of Chelan County, Washington’s public utility district, explained at the congressional hearing in January 2022, miners’ interest in idle fossil fuel facilities is driven by a simple market mechanism. , which means that there is no rational reason to stop exploring such possibilities.

In that sense, the environmental push by New York state lawmakers is an example of a broader discussion that will inevitably linger around crypto mining and fossil fuels. Although 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: Warren, who does not perceive this measure as adequate, admitted that such a possibility exists

Belizaire commented:

“I think the moratorium will make mining companies think twice about using fossil fuels to power their operations. New York’s mission is clear: it’s all about renewable energy. PoW crypto mining needs to get on the bus.”

He believes that crypto mining could even become a “special ingredient” of the larger green energy shift.