New York’s Bitcoin mining boom was halted by a state Senate bill. It will stop new permits for certain fossil fuel power stations to be used in Bitcoin mining. This measure was also passed by the state Assembly earlier in the year. It will initiate a study about the environmental impact that mining facilities have on the state.
The crypto industry promised new jobs but had divided Senate Democrats over whether the moratorium would have greater economic or environmental costs. As the state Senate approached its deadline, talks remained stalled until the late hours of the evening.
As the bill heads to Governor Kathy Hochul, it will be put to another test. Hochul was presented with a $40,000 donation from the chief executive of a company which runs an ex-alcohol plant that has been converted to a cryptomining facility. The New York Times reported.
The resurgence of fossil fuels has caused backlash
Many mining companies have opened their doors in the US after China imposed new restrictions last year on Bitcoin mining. New York is a hub for Bitcoin mining due to its abundance of hydroelectricity and the possibility to restart old fossil fuel plants in order to mine Bitcoin.
Some residents and environmentalists are expressing concern about the rise of fossil fuels. They are concerned that Bitcoin will help revive fossil fuel plants and cause damage to ecosystems, derailing the state’s efforts in tackling climate change.
Today’s bill passed. It imposes a moratorium for two years on new permits for cryptocurrency mining operations using a particularly energy-intensive approach to verify transactions on blockchain. This is called proof of work and it underpins two major cryptocurrencies, Bitcoin and Ethereum.
Miners use special hardware to solve difficult puzzles and earn crypto tokens in exchange for proof of work. This process consumes a lot of energy. The Bitcoin network would be 32nd in the world in terms of annual electricity consumption (right between Argentina, the Netherlands).
This energy demand poses a threat to climate goals, which were set in 2019 by New York State. The state committed to reducing greenhouse gas emissions by 85 percent by 2050.
Greenidge Generating Station is located in New York’s Finger Lakes area. It has become a hot spot for residents concerned about the environmental impact of cryptocurrency mining. Greenidge began life as a coal-fired power station. In 2020, it was converted to a nearly full-time Bitcoin mining operation.
Greenidge is exempted from the moratorium on Bitcoin mining. This bill focuses on fossil fuel power plant applications for permits to mine energy proof-of work-based cryptocurrencies. The bill does not prohibit any operations that are powered by renewable energy, or use less-energy-intensive alternatives to proof of work as many other cryptocurrency use to verify transactions.