Bitcoin

New York States Crypto Mining Ban Means a Foggy Future for Bitcoin and Others

A few days before the new york state legislature closed on June 2, the fate of assembly bill a7389c seemed certain: even though the assembly passed it roughly a month earlier, the bill The bill was never assigned to the schedule of a crucial committee that needed to pass before going to a vote in the state senate. its chances of becoming law seemed incredibly slim.

but legislative officials knew they had enough votes in the senate to pass the bill. So, voters made phone calls, supportive legislators lobbied their colleagues, and with the legislature closing for the year a few hours away, the bill passed the state senate. In the early morning hours of June 3, the New York State Legislature passed the first-ever moratorium on fossil fuel-powered proof-of-work cryptocurrency mining of any kind in the country. “Hundreds of people calling in by the hour every day in the days leading up to the final hours of the session showed legislative leadership how concerned New Yorkers were,” New York State Assemblywoman Anna Kelles, the bill’s sponsor, told The Associated Press. daily beast in an email. “The voice of the people was the most important factor for this bill to reach the goal.”

Reading: York closes in on bitcoin mining

Cryptocurrency industry insiders see those last few hours differently: as a quick and surprising move that puts New York on the path to wiping out its sector altogether.

“Our efforts to secure enough votes against the bill were essentially thwarted,” john olsen, head of the new york state blockchain association, told the daily beast. “We were certainly surprised…between being told this bill probably won’t pass and 24 hours later, it’s on the Senate floor.”

The bill is now in the hands of the government. kathy hochul, who has yet to show her commitment to sign or veto it. Up for grabs is the emissions footprint of a form of digital currency mining that environmental advocates, including Kelles, say is fundamentally at odds with New York state’s climate goals. In 2019, the state committed to a historic set of environmental goals when it passed the Climate Leadership and Community Protection Act (CLCPA), including one to limit its emissions by 85 percent by 2050 from 1990 levels.

but the potential proliferation of bitcoin mines powered by fossil fuel plants would thwart any effort to reach this compromise. the state is home to 49 retired power plants that could be brought back online with little difficulty. Kelles and his counterparts fear that such plants would appear attractive to an industry that, by the nature of its setup, has exponentially growing energy needs.

Major cryptocurrencies like bitcoin and ethereum are currently validated through a system called proof-of-work, which forces miners to compete against each other to solve a guess-the-number-style algorithmic puzzle with random brute-force attempts. the winner gets the right to mine a new token.

at one time, mining bitcoins in this way could be done on a laptop; today, entire facilities are dedicated to it, which collectively generates a carbon footprint greater than that of entire countries. it is estimated that mining a single bitcoin has the same environmental impact as millions of visa transactions.

For years, most of the world’s major crypto mining operations were based in China and powered by hydroelectric power. but the country’s crackdown on mining caused many to move their cryptomines west. a growing number of mines in the us they are expanding their operations by holding on to cheap fossil fuel energy sources, especially in areas where aging infrastructure is available for the taking. this includes sites where orphaned oil and gas wells are spewing methane, active drilling rigs are burning stranded natural gas, and struggling power plants are sited, with their crews, waiting for a lifeline, all sitting ducks for crypto companies looking to get ahead in the most affordable way possible. .

one such setup exists in dresden, new york. The Greenidge Power Plant, formerly a coal-fired facility, was closed in 2011 when its owners went bankrupt. A few years later, Atlas Holdings, a private equity and investment firm, came along, bought the plant and, as reported by Grist, obtained state grant funds to convert the plant to run on natural gas. atlas reopened the plant in 2017 and two years later began using it to mine bitcoins.

with the 2017 permits came the right to draw 139,248,000 gallons of water per day from nearby Seneca Lake through an intake pipe that sucks up both wildlife and water indiscriminately; dump it back into the lake at 108 degrees fahrenheit; and emit 641,000 tons of greenhouse gases per year, all while the machines hum 24/7.

See also: Crypto Denominations: Satoshi Values & Wei to Ether | Gemini

Barring a pending permit application, greenidge is the only such facility currently operating in the state, and the bill would protect it and therefore not be affected. But according to an analysis by Cornell University engineer Anthony Ingraffea, who testified against cryptocurrency mining at the State Assembly last October, there are four other former coal-fired power plants in upstate just like this one. if they were all converted to proof-of-work crypto mines, their collective annual emissions footprint would make up eight percent of the allocated 254 million metric tons of greenhouse gas emissions that the state aims to limit by 2030.

That possibility is real if the state refuses to intervene, he argued in his testimony, because the increasing complexity of proof-of-work for crypto mining requires more powerful (and more energy-intensive) technology over time.

“if the governor and the dec of new york say, ‘yes, go ahead, greenidge, shoot again,’ then the door is open,” ingraffea told the beast newspaper. “How are you going to say no to someone else?”

ingraffea points out that there are other methods to validate blockchain transactions that consume less energy and that the bill does not contemplate. all forms revolve around what is called a “consensus mechanism”, or the way through which a decentralized community decides who has the right to validate new transactions and add blocks to the blockchain. the proof-of-work mechanism grants the right to mine coins based on the amount of computational effort a user has put in. another so-called proof-of-stake grants this right based on the share a user has of the coin or amount they currently own. another, called proof of authority, does so through a user’s identity or existing reputation. The last two methods could exist in harmony with the new york climate commitments.

but according to olsen, bitcoiners feel the new bill is targeting them unfairly.

“Based on the way the bill was presented and the rhetoric of the proponents, this really is an anti-cryptocurrency bill about climate protection or environmental justice policy,” Olsen said. “I think the main narrative for proponents became, ‘well, we’ve got all these plants out of commission, so naturally the industry will start to take them away and start these new operations’ when, by and large, bitcoin miners they try to use the lowest form of carbon production and look to use renewable sources.”

liz moran, a new york policy advocate for earthjustice, an environmental law firm that pushed the legislation, thinks this argument is circular: “[crypto miners] constantly say they don’t plan to buy fossil fuel power plants” , she told the daily beast. “So if that’s the case, why do you have a problem with this moratorium?”

but olsen, and others in the cryptosphere who attacked the bill in the weeks leading up to its passage, let’s just say that, regardless of the tangible impact, the bill sends an unwelcoming signal to the industry, which has settled in recently in new york. the state is responsible for nearly 20 percent of bitcoin mined in the nation. the regulations will only communicate to the parties that make up that percentage that they are not welcome here.

olsen is notably spooked by the language in an earlier version of the bill that failed, which called for a three-year moratorium on all cryptocurrency mining. This year’s bill is much more limited: crucially, it does not regulate other forms of mining beyond proof-of-work, nor does it regulate mines that connect to the state grid, for which the fuel source most prevalent remains natural gas, according to the energy information administration.

But Olsen fears that future iterations of the bill, drafted after the state department of environmental conservation completes a generic environmental impact statement on cryptocurrency operations required by ab7389c, could be broader in scope. In that case, he believes, bitcoiners would simply move on, and the industry’s overall emissions would remain intact.

“does nothing to prevent emissions beyond the borders of new york,” he said, noting that the main effect of the bill is in its message, that “the energy intensity of bitcoin mining has no place in new york.”

Supporters of the new bill admit that it is, in its narrowness, largely symbolic, but its symbolic nature is both a weakness and a strength. Having created a viable legislative path to place a moratorium on the largest-issuance method of validating block transactions, advocates in New York are hopeful the bill will send a message to other states vying for something similar, perhaps laying the groundwork for more generalized legislation. .

See also: What Is SHA-256 And How Is It Related to Bitcoin? – Mycryptopedia

“even if we succeed in new york with a moratorium on this practice, miners will just pick up their machines and go somewhere else where there is no regulation,” said yvonne taylor, co-founder of seneca lake guardian, an advocacy group dedicated to protecting the environment in the finger lakes region of new york. “There should also be federal regulations.”

Taylor, a teacher and seventh-generation resident of Seneca Lake, has spent the past year lobbying the New York State Department of Environmental Conservation to deny renewal of a key permit that the Greenidge Power Plant would need to continue operating. . She’s in addition to working full-time: She’s a “school teacher by day and a volunteer activist every other moment,” she told the Daily Beast, and supports Kelles’ legislation for a limited testing moratorium. of work. With a win under her belt, she is now turning her attention to taking her wrestling to the national level.

“On my spring break this past April, I traveled to different communities in West Virginia and South Carolina to meet with people there and talk to them about how crypto mining is negatively affecting them,” Taylor said.

These trips were in the service of a national coalition Taylor is building against fossil fuel-powered proof-of-work mining, which includes contributions from groups in eastern Tennessee, where “at least eight cryptocurrency mines” are located. , according to local broadcaster wbir. drawing the ire of residents and cook county, georgia, where noise pollution from the blockstream mine is affecting quality of life. she says her stories are “eerily similar.”

“These crypto miners come in under the guise of being a data center,” he described. “The decision makers in the city are not really well equipped to understand what is really coming. and many times they are enamored with the promise of jobs and income and welcome them with open arms. only later do I discover that those promises made are not kept and that there are many negative implications.”

if new york’s bill hadn’t passed the legislature, its executive branch could have passed it on its own, a white paper from columbia university’s sabin center for climate change law released in march . It’s the same authority former Governor David Patterson used when he passed a limited moratorium on fracking in 2010; it was also the first state to do that, and within three years, at least 400 cities and townships in more than 20 states had passed similar states.

but taylor said he can’t celebrate the moratorium until it becomes law, a contingency that seems increasingly unstable as the hochul state has hesitated to make the decision to do so. the governor told reporters on June 7 that she would be “looking at the bills very, very closely” for the next six months, which could stretch until her gubernatorial election in November. More recently, New York City Mayor Eric Adams urged her to veto the bill.

The crypto industry is aggressively pushing it to do the same. In the weeks before the moratorium passed in the Senate, Hochul’s campaign for governor received thousands of dollars in donations from crypto groups. Ashton Moniat, CEO of Coinmint, which operates a cryptocurrency mine in a former aluminum plant in Massena, New York, received at least $40,000.

perianne bored, founder and president of industry group the digital chamber of commerce, called the bill a “significant setback for the state” in a statement issued before it passed. (New york state lobbying records show the chamber spent at least $6,500 lobbying in the state in 2021; according to opensecrets, it spent more than $200,000 lobbying at the federal level this year alone.)

“Our sincere hope is that Governor Hochul sees the devastating effect this moratorium will have on New York and does not sign this bill into law,” the statement read.

Other crypto experts have joined an echoing chorus of resistance to the moratorium. Foundry, a Rochester-based mining company, issued a statement on June 3 expressing its disappointment with the bill. Ethereum founder Vitalik Buterin tweeted his opposition to the ban on proof-of-work mining the next day.

but kelles, author of the bill, remains steadfast in her commitment to make it law.

“It has been estimated that proof-of-work cryptocurrency mining alone could put us above the 2.0 degree Celsius rise in global temperature, a tipping point for runaway climate change,” Kelles said. “We simply cannot afford to allow proof-of-work crypto mining to jeopardize New York’s efforts to reduce greenhouse gas emissions and meet our climate goals.”

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