N.Y. enacts limits on crypto-mining
New York became the first state to enact a temporary ban on new cryptocurrency mining permits at fossil fuel plants, a move designed to address the environmental concerns over the energy-intensive activity.
The legislation signed by Gov. Kathy Hochul last week was the latest setback in a bruising month for the cryptocurrency industry, which had lobbied fiercely against the bill but was unable to overcome a successful push by a coalition of left-leaning lawmakers and environmental activists.
The legislation will impose a two-year moratorium on crypto-mining companies that are seeking new permits to retrofit some of the oldest and dirtiest fossil fuel plants in the state into digital mining operations. It also requires New York to study the industry’s impact on the state’s efforts to reduce its greenhouse gas emissions.
The move in New York comes months after some other states had adopted more friendly policies toward the industry, offering tax incentives in hopes of luring crypto-mining operations after China cracked down on the activity last year.
But it also comes at a moment of intense turbulence, and a potential crossroads, for the cryptocurrency sector.
Earlier this month, the crypto exchange known as FTX suffered a swift and public collapse that led to its declaration of bankruptcy. The fall of what had been a trusted player in the new market has led to broader questions about the future of the exchange, as well as possible criminal charges for its principal, Sam Bankman-Fried.
The state Legislature, which is controlled by Democrats, had passed the legislation in the waning hours of this year’s legislative session that ended in June, after successful lobbying efforts that also included winemakers and other concerned business owners upstate, where many of the existing mining operations are based.
For months, Hochul had remained noncommittal on whether she supported the bill, saying that her office was reviewing the legislation and that she was weighing concerns that a moratorium could impede economic activity in the region.
Bitcoin mining — the process by which powerful computers solve complex mathematical equations to validate transactions — is a crucial part of the cryptocurrency economy. But climate advocates have long said that the value of crypto-mining operations were not worth the environmental costs. The process requires an immense amount of electricity — so much so that China banned the practice last year in an effort to meet its climate goals.