New York has now banned any proof-of-work block reward mining in the state that relies on carbon-based fuels. Governor Kathy Hochul signed into law a bill that was passed earlier this year that curtails mining that relies on non-renewable energy for the next two years.
In a legal filing announcing that she had signed the bill, Hochul described the bill as a “key step for New York as we work to address the global climate crisis.”
We did it!!! Thank you to @GovKathyHochul for signing the crypto moratorium into law! This is a huge win for our planet and a sign that New York is not afraid to lead the nation in our climate policy. Thank you to everyone who fought with me 🧵 pic.twitter.com/a2t3LPzB7P
— Anna R. Kelles (@annakelles) November 23, 2022
The law sailed through the state assembly in April. Two months later, the state senate approved it, leaving it to Hochul to sign it into law. She has held off from signing the bill for months even as both factions presented their cases for why she should take their side.
The new law, which took effect immediately after the governor signed it, bars the state from issuing permits for block reward miners relying on electricity generated through carbon-based fuel. It further calls on the Department of Environmental Conservation to prepare an environmental impact study on block reward mining.
However, miners who rely on renewable energy can continue to operate and obtain new licenses.
‘New York is setting a dangerous precedent’ – Miners criticize the bill
The digital currency industry has been united against the bill since it was passed in June.
“Not only will this limit the potential benefits of an emerging industry to empower regional economic and technological growth, including producing jobs, specialized knowledge, and innovation, but it will also cause regulatory uncertainty, placing policymakers at the head of choosing how an emerging industry develops,” BSV Blockchain’s Public Policy Director Bryan Daugherty commented at the time.
Hochul’s signing of the bill into law has set off a fresh wave of criticism. Some, like the Chamber of Digital Commerce’s Perianne Boring, believe it sets a dangerous precedent that the entire tech industry must unite against.
“The approval will set a dangerous precedent in determining who may or may not use power in New York State,” she stated in a statement.
Kevin Zhang, the Senior Vice President at Foundry, an institutional digital asset company, concurs. He believes that “not only is it a clear signal that New York is closed for business to Bitcoin miners, it sets a dangerous precedent for singling out a particular industry to ban from energy usage.”
While the effect will be most felt by the block reward mining industry, some believe that it’s a short-sighted band-aid solution that will ultimately cost the state.
For one, it will see New York lag behind other states that are implementing friendly regulations to attract more digital asset companies. Data from Foundry has shown that more companies are leaving New York to move to Texas, Georgia, Wyoming, and other friendlier states.
“Our customers are being scared off from investing in New York state. Even from Foundry’s deployments of $500 million in capital towards mining equipment, less than 5% has gone to New York because of the unfriendly political landscape,” Zhang told CNBC.
With the migration of capital, other follow-on effects will ensue. The first is the loss of jobs for a growing workforce in New York, which depends on these digital asset companies. According to Boring, whose Chamber of Digital Commerce lobbies for the Bitcoin industry across the U.S., several labor unions oppose the law as it will have dire economic consequences.
“Bitcoin mining operations are providing high-paying and high-grade, great jobs for local communities. One of our members, their average pay is $80,000 a year,” she remarked.
Hochul, in her statement, recognized that it’s critical for the state to continue creating economic opportunities for New Yorkers. However, she believes that the environmental cost is too high a price to pay for the financial benefits.
Several mining companies are now expressing their concern that other states could follow New York’s lead and crack down on block reward miners. The Empire State is a trendsetter in the U.S., with its BitLicense regime spawning similar regulations across the U.S., most recently in California.
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