Cryptocurrency mining businesses looking to set up shop in New York State may face some challenges. Governor Kathy Hochul has approved laws prohibiting cryptocurrency mining in the nation, making it the first state to do so. The environmental legislation imposes a two-year moratorium on new and renewing air licences for fossil fuel power plants used in mining that need “proof-of-work” authentication. The Department of Environmental Conservation will also have to investigate if and how crypto mining undermines the government’s efforts to combat climate change.
The measure was enacted by the state assembly in June, but it didn’t make it to Hochul’s desk until this Tuesday. It was not assured that it would become law. The governor did not commit to signing the bill during an October election discussion, according to The Hill. Lee Zeldin, her major opponent, stated he would not sign the law if he were in a position to do so.
Politicians and environmental organisations have expressed concern that crypto mining, especially proof-of-work mining, uses excessive amounts of electricity. The computationally complex process increases the burden on the electrical grid, prompting several mining companies in New York to construct natural gas-powered power plants to keep their operations running. The bitcoin community has sometimes attempted to mitigate the damage. Ethereum, for example, just completed a transition to a less energy-hungry “proof-of-stake” mechanism based on user validation.
It’s unclear if other states will follow suit. Democratic Senators have pressed Texas to act on crypto mining energy needs, but the state administration has yet to move. Not surprise, crypto supporters have objected to regulations restricting their behaviour. According to the Chamber of Digital Commerce, New York’s legislation sets a “dangerous precedent,” and proof-of-work mining contributes to economic development. There’s also the issue of effectiveness: New York’s legislation may push some miners to states with laxer regulations.