New York Governor Kathy Hachul signed a first-of-its-kind bill on Tuesday banning certain bitcoin mining operations that use carbon-based power sources, becoming the first state in the nation to impose such a ban. It is also the nation’s most restrictive law regulating cryptocurrency mining.
The bill triggers a two-year moratorium on permit renewals for crypto companies that are powered by fossil fuels and use proof-of-work authentication methods, which use millions of computers, to validate transaction data. Unless a crypto company runs on 100% renewable energy, its operations will have to find alternative green means of energy or cease, and new entrants will not be allowed to come online. Proof-of-work mining is how bitcoin companies authenticate bitcoin tokens from the blockchain.
New York has become a central crypto hub after China introduced its own ban on crypto mining last May. Due to the state’s low energy costs and optimal climate conditions for productive mining operations, crypto miners have been able to thrive with relative ease. But climate activists have increasingly warned of the environmental cost of such activities, which use sophisticated equipment and a large amount of electricity, and which Gov. Hachul highlighted in a memo issued late Tuesday.
“I will ensure that New York continues to be the center of financial innovation while also taking important steps to prioritize the protection of the environment,” Hochul said. “It is the first of its kind in the country and a key step for New York as we work to address the global climate crisis.”
While crypto supporters have taken to social media and the press to express their dissatisfaction with the new ruling–NY-based crypto startups raised a collective $6.5 billion last year–environmental groups praised Hochul’s decision to sign the bill.
“For too long, the state’s dramatically energy-intensive mining facilities, whose massive carbon footprints exacerbate climate change, have had little oversight,” said Richard Schrader, the New York Legislative and Policy Director for the Natural Resources Defense Council. “Not only does crypto take a toll on the environment, but communities in upstate New York could suffer as once-abandoned coal power plants come back from the dead as ‘zombie plants’ that mine crypto all day, every day.”
