In the United States, many states like New York are seeing requests for permits to mine cryptocurrency. While still a relatively new concept for many people, cryptocurrency mining as an industry and business is on the rise.
However, cryptocurrency mining is under-fire by New York government officials who have raised concerns on its impact on the state’s climate goals. Now more than ever, many states are aiming at achieving zero-emissions and are not stopping no matter the costs. Targeting crypto mining paves an uncertain future in New York and perhaps around the United States.
New York Officials Crack Down On The State’s Crypto Mining Industry
An article released by ABC News reported on a decision regarding the future of these miners. In particular, an old coal-powered plant was up for grabs to mine Bitcoin when an air permit was submitted to begin work. However, New York officials denied this request on the grounds that it was a threat to the state’s climate goals.
Interestingly, while New York denied the request, the Greenidge Generation power plant was closed previously, but in 2020 it was converted from coal to natural gas, and Bitcoin began to be mined. Currently, it houses around 15,000 servers that use a majority of the energy produced by the plant.
The decision came at a time when environmentalists are pushing against crypto mining because of the energy required to maintain cryptocurrency networks via Proof-of-Work, where a miner adds the latest block to the blockchain, winning the block reward and transaction fees.
The environmentalists argue that the plant being converted to mine cryptocurrency meant a significant increase for energy which was not disclosed in the original permit submission.
Greenidge power plant is an example of what companies desire in terms of keeping up with the demand of mining cryptocurrency.
When the decision was made, the agency sent a letter to the company saying, “instead of helping to meet the current electricity needs of the state as originally described, the faculty is operating primarily to meet its one significant new energy load.” This decision upset the company since they argued the plant rakes up only a small fraction of New York’s electricity generation, claiming it would not impede long-term climate goals.
Analyzing What’s Next?
Governor Kathy Hochul is now looking at decisions to sign into law a two-year moratorium on new and renewed air permits for fossil fueled power plants for mining. However, this does not apply to the Greenidge power plant.
New York could pave the way for future companies when looking for places to mine cryptocurrency which could lead to more and more regulation.
The moratorium was passed in the New York Senate (prior to the release of this article) which has companies and miners in general worried about crypto mining. It’s undeniable that the ruling has miners across the nation on their seat because if signed into law, the ban would create a domino effect and make New York the first state to ban the practice. Since New York is politically progressive, many other states may follow and replicate something relatively similar to pass into law.
There is no denying the evidence that PoW (Proof-of-Work) utilizes loads of energy due to needing hefty computer equipment, but there may not be a reason to ban it completely.
On the other hand, because New York is also a cold-climate state, these carbon-based plants during certain months in the year would need to produce less energy to cool the equipment. This simply means the equipment required to mine Bitcoin for instance, needs to be cooled resulting in more energy consumption during the hotter months of the year. However, mining crypto during the cold months could be used as a way to fuel the economy. The US currently has the largest share of crypto mining worldwide.
Additionally, a pushback like this in New York could mean crypto miners will migrate to more friendly jurisdictions – in other words moving to states with fewer commitments towards achieving zero-emissions. This could result in even more carbon-emissions than in states that would allow for mining under certain conditions.
The future of crypto mining in New York is unknown, many believe Gov. Hochul will sign this moratorium into law – which could forever change the way cryptocurrency is mined and regulated in the United States. There are negative drawbacks to this domino effect, but on the other hand, the environmentalists are pushing for this law because it would mean one less man-made carbon-emitting activity impacting the environment.