New York Is Banning Crypto Mining That Uses Fossil Fuels
The New York Senate has passed a moratorium to outlaw crypto mining using carbon-based resources.
A measure that prohibits crypto mining enterprises from using carbon-based fuel to power their facilities has been approved by the Senate of the state of New York.
Mining using proof-of-work is one of the two most popular mechanisms that cryptocurrencies use to verify new transactions on the blockchain and make new tokens. However, mining using proof-of-work requires significant amount of energy to validate blockchain transactions. Therefore, the bill explicitly targets proof-of-work mining.
Bitcoin, Ethereum, and Dogecoin are three of the most well-known proof-of-work tokens currently in circulation.
Proof-of-stake is an alternative to proof-of-work that describes how cryptocurrencies, such as ETH2.0 and Avalanche, use staking to do the same thing but consume less energy. It is believed that proof-of-stake is more efficient for scaling than proof-of-work.
According to the text of the measure, lawmakers have drafted it in an effort to "mitigate the current and future effects of climate change." This is part of an effort to reduce the state's carbon footprint.
Cryptocurrency mining operations run proof-of-work authentication methods to validate blockchain transactions are an expanding industry in the state of New York. Cryptocurrency mining operations running proof-of-work authentication methods to validate blockchain transactions.
According to the report, "the amount of energy usage" in the state will significantly rise due to the ongoing expansion of business operations.
If the measure is approved, a moratorium of two years will be placed on any proof-of-work mining in the state that involves the combustion of fossil fuels.
However, enterprises that are proof-of-work miners and use only renewable energy sources will still be permitted to operate.
"Ultimately, this bill will hurt New York more than it will help, as these miners will increasingly cluster in states such as Texas, Tennessee, Washington State, and other locations that provide solar, wind, hydro, and other sources of clean energy," said Steven McClurg, co-founder and CIO of Valkyrie Investments, which oversees WGMI, the largest U.S.-based Bitcoin miners exchange-traded fund (ETF).
After the New York State Assembly approved the law in April, it received approval from the state Senate with a vote of 36 to 27 in favor.
It is now up to New York Governor Kathy Hochul, who is in charge of signing or vetoing any law that comes before her desk.