Photo Credit: Unsplash/ Kanchanara
New York on November 23 became the first state in the US to bar certain types of cryptocurrency mining after Governor Kathy Hochul signed a two-year moratorium that bans new Bitcoin mining operations that use carbon-based energy sources. That said, the state's existing dozen or so operations that draw power from the grid remain unaffected, and so do solo miners. The bill cites the heavy climate and infrastructure costs of crypto mining in its reasoning as proof-of-work mining generally uses large networks of computers to generate encrypted blocks on the blockchain.
The moratorium does not apply to new or renewed permits if the company has already filed paperwork to operate in New York. However, Bitcoin miners that do not use 100 percent renewable energy will not be allowed to expand or renew their permits within the next two years.
"This is the first regulation of its kind in the country," Hochul said in the legislative order, adding that this is an important step for New York as the state seeks to reduce its carbon footprint.
On top of the moratorium, the new law mandates that New York's Department of Environmental Conservation come up with an environmental impact statement assessing proof of work's statewide impact within a year, that can then be used to inform future policy.
The newly signed bill was approved by the state senate back in June, but Hochul remained non-committal on it up until this week. The likes of New York City mayor Eric Adams, as well as other pro-crypto lobbyists pushed hard ( for the governor to veto the bill, expressing concerns that the regulation would stifle business interest in the state and prevent industry growth.
As CNBC has learned from industry insiders, there is now concern in Bitcoin mining circles that other Democratic US states could follow New York's lead. The Chamber of Digital Commerce wrote in a statement that the approval “could set a dangerous precedent”.
Kevin Zhang of Foundry, which manages the world's largest BTC mining pool by total hash rate, Foundry USA, agreed with the Chamber of Digital Commerce that the law could send a dire signal to the industry.
“Other blue states often follow the lead of New York state and this would be giving them an easy template to replicate,” warned Zhang.
The mining industry in New York, however, has been quick to respond, migrating to other US states. “Our customers are being scared off from investing in New York state,” Zhang continued.