This week, New York became the first state to ban some types of cryptocurrency mining following mounting environmental concerns over the insane levels of energy required for the process.
“I will ensure that New York continues to be the center of financial innovation, while also taking important steps to prioritize the protection of our environment,” New York Governor Kathy Hochul said after signing the legislation into law on Tuesday.
The new law is the latest blow to the cryptocurrency industry following the collapse of FTX, the world’s second-largest crypto exchange earlier in the month. New York was considered a safe haven for crypto miners because of its relatively cheaper energy costs through the Niagra Falls, and the wealth of old, abandoned fossil fuel power plants.
To clarify, the legislation is not a complete ban on crypto mining or crypto miners. It’s a two-year moratorium on permits for crypto mining companies looking to use these old fossil fuel plants and retrofit them into mining hubs. It also means that the state’s Department of Environmental Conservation will be required to study the industry’s impact on its efforts to shrink its carbon footprint.
The legislation specifically impacts crypto miners using the proof-of-work authentication, an energy-intensive process that requires millions of high-powered computers to track and secure transactions in bitcoin and other cryptocurrencies.
The industry has also made efforts to address its energy consumption problems. Ethereum in September switched to proof-of-stake authentication, a less energy-intensive process of validating cryptocurrency transactions. Ethereum claims that it the switch will lower its carbon footprint by over 99%.
Information for this briefing was found via Axios, the New York Times, CNBC, Politico, S&P Global, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.