After nearly six months of sitting idle, Gov. Kathy Hochul signed the nation’s first moratorium on cryptocurrency mining – the process the industry uses to produce additional units of currency .
The new law puts a two-year pause on issuing air permits on “proof-of-work” virtual mining, which relies on powerful computers to solve complex algorithms, releasing more digital coins into the market.
But doing so consumes huge amounts of electricity, which becomes problematic for the environment when those operations are powered by fossil fuels. One facility that has generated protest is Greenidge Generation, a natural gas-powered mining plant on the Finger Lakes that’s faced environmental protests and potential closure this year.
The moratorium calls for a study of the industry’s environmental impacts. The legislation also prevents mining companies from acquiring shuttered energy facilities and bringing them back online to fuel this carbon-intensive industry. The global production of bitcoin — just a single type of cryptocurrency — uses more electricity in a year than all the televisions in the U.S., according to the University of Cambridge.
“This bill will create the pause we need in the current trend of purchasing old power plants in New York for corporate profits and allow us to properly evaluate the impact of this industry on our climate goals before it’s too late,” said Assemblymember Anna Kelles, who sponsored the bill. The state Legislature passed it in early June.
Statewide, the law covers about 50 abandoned fossil fuel power plants potentially at risk of being purchased and restored. Combined, these facilities could add about 18 million metric tons of carbon dioxide and methane into the air, according to Anthony Ingraffea, an engineering professor at Cornell University.
Climate activists and experts have been urging the governor to sign the bill for months. Their chief concerns were that the cryptocurrency mining industry threatened the state’s most important climate laws and goals, which call for deep reductions in greenhouse gas emissions across all sectors of the economy.
The new law does not apply to current mining operations such as Greenidge Generation in Dresden, which is currently contesting the recent denial of an air permit renewal and struggling to comply with water pollution regulations. The company is still running as it pushes for an appeal to the air permit denial, and a hearing is scheduled for early December. The news was still met with relief and celebration by some local residents who have been fighting for its closure.
“The crypto industry is going to whine that this is a blow, but it’s not,” Yvonne Taylor, vice president of Seneca Lake Guardian, stated via email. “Gov. Hochul did the right thing by putting real New Yorkers over the failing outside speculators who choose not to mine crypto in more efficient ways that don’t destroy the climate, environment and local economies.”
The moratorium took a backseat during the election — with Hochul keeping somewhat quiet on whether she would sign it. The Blockchain Association adamantly opposed the moratorium, claiming it would dissuade cryptocurrency companies from setting up shop in New York. Rep. Lee Zeldin, Hochul’s Republican challenger in the governor’s race, accused the measure of being anti-business.
“The Business Council does not believe the Legislature should seek to categorically limit the growth and expansion of any business or sector in New York,” Heather Briccetti Mulligan, President and CEO of the Business Council of New York State, said in a statement.
Using fossil fuels and acquiring power plants are not the only options available to the industry. They could use renewable energy sources or change the way they produce digital coins.
For example, the most popular digital asset after bitcoin is ethereum. Recently, its developers switched from using the traditional carbon-intensive practice of solving algorithm puzzles to a proof-of-stake process, which employs users to validate transactions in exchange for a fee. This method uses much less electricity.
“Cryptocurrency mining is one of the most unregulated, energy-intensive industries in New York state right now,” said Eddie Bautista, executive director of the NYC Environmental Justice Alliance. “This legislation will protect our health and environment by closing industry loopholes that undermine the zero-emissions mandate in our landmark Climate Leadership and Community Protection Act.”
The ban comes a day after New York Attorney General Letitia James sent a letter to Congress, urging the federal body to prohibit retirement investments in cryptocurrencies. The industry has lost $2 trillion since peaking a year ago, according to CNBC. Mayor Eric Adams, an open proponent of cryptocurrency, said this week that he still supported the currencies, despite the recent implosion.