On Tuesday evening, the New York State Assembly imposed a two-year moratorium on bitcoin mining pending an environmental impact assessment.
The news was posted on Twitter:
The bill will now go to the State Senate, which is controlled by Democrats. If it becomes law, it will almost certainly be the most comprehensive legislation of its kind in the world. Here is an extensive reference material that FIN by James Ledbetter published March 27:
The “Green War” in Bitcoin mining is gaining momentum
FIN wrote repeatedly (just recently, last week) about proposals around the world to limit or close cryptocurrency mining for environmental reasons. The huge amount of electricity needed to mine bitcoin and other “proof of workCryptocurrency-based cryptocurrencies are contrary to the stated goals of many countries and jurisdictions to reduce their carbon footprint. However, outside of China, very little has been done on this front (outside of China, and even there the environmental case is speculative); Earlier this month, a committee of the European Parliament refused to declare a moratorium on mining, which was put to a vote as part of the broader digital asset system.
This week saw a potential regulatory breakthrough: the New York State Assembly’s Environmental Protection Committee approved a version of a bill that died last year; check will impose a two-year moratorium on the mining of proof-of-work cryptocurrencies, especially bitcoin, which is almost certainly the most mined cryptocurrencies in New York State. There is similar bill in the State Senate and if both are passed, it hardly seems crazy that Gov. Kathy Hochul, who was appointed when Andrew Cuomo stepped down last year and will be “re-elected” for the first time this year, could sign it into law. AT January Politico storyHochul’s office said it is “actively considering proposals regarding the role of cryptocurrency mining in the New York energy landscape” but is not endorsing any specific bill.
If this policy becomes law, it could make a big difference even to out-of-state residents. True, the bill will not shut down all crypto mining in New York overnight; rather, it will prohibit the renewal of any existing permits and the approval of any new permits. Moreover, the bill only concerns permits for “carbon-fuelled power generating facilities”; presumably, at least some cryptocurrencies in New York use exclusively renewable energy and will be released.
However, New York’s share of the bitcoin pie is very large. In accordance with figures released last year by crypto mining pool Foundry USA19.9% US Bitcoin hashrate— the collective computing power of the miners — is located in New York, making it the largest state for mining bitcoins, followed closely by Kentucky, Georgia and Texas.
Unsurprisingly to those following this question, the public company Greenage Generation is at the center of the debate in New York over cryptocurrency mining. Greenidge operates a 107 megawatt natural gas plant in the Finger Lake region that powers bitcoin mining. The company claims to create high-paying jobs in the upstate and generate electricity for the local grid; it has the support of the local electricians’ union, but has drawn criticism from many environmental groups, including Seneca Lake Guardian and Sierra Club. In December, Senator Elizabeth Warren sent Greenage hot letter, expressing concern about the impact of bitcoin mining on the environment and energy costs. (FIN emailed Greenridge asking for an interview but received no response.)
New York State has steadily built up an arsenal that it could potentially use to stop or slow down companies like Greenidge. Certainly, white paper published this week Columbia University’s Sabin Climate Law Center has concluded that Governor Hochul and the state Department of Environmental Conservation (DEC) already have the legal authority to withhold any new permits for cryptocurrency mining facilities. In 2020, the State Climate Leadership and Community Protection Act went into effect, requiring that statewide greenhouse gas emissions be reduced by 85% by 2050.
At least some of Greenidge’s critical state permits were issued in 2016 and thus were due to be renewed in 2021. However, they do not mention bitcoin mining, and with the climate law coming into force, it is unclear whether Greenidge is complying with its requirements. Certainly, Last May, the state DEC wrote to Greenidge declaring its renewal application “incomplete” and requesting more information on greenhouse gas emissions by September. DEC is still reviewing Greenidge’s application for an extension.
As FIN pointed out back in DecemberGreenidge, for all the attention it attracts, is rather modest in size. In all of 2021, Greenidge mined 1,866 bitcoins and generated $88 million in crypto mining revenue. The company lost money for the year, mainly due to the impairment of goodwill in another part of its business, recently acquired support.com. Greenidge’s crypto mining business appears to be profitable, but not insanely so, even as Bitcoin prices skyrocketed at the end of 2021.
Coincidentally, Coindesk published this week exemplary autopsy in the city of Plattsburgh, New York, which in 2018 became the first municipality in the United States to ban cryptocurrency mining, as it turned out, for 18 months. These problems will arise worldwide as bitcoin mining expands. This week, Block reported that Bitfinex/Tether, which produce the world’s largest stablecoin, will go into the bitcoin mining business, focusing on Latin America and Europe. ExxonMobil has a pilot program in North Dakota that uses excess gas that would otherwise be flared from oil wells to mine cryptocurrency. According to one report, the oil giant is considering expanding this program to Alaska, Nigeria, Argentina, Guyana and Germany. Many of these places will be watching what New York State is doing in an attempt to balance the supposed economic benefits of cryptocurrency mining with the need to reduce greenhouse gas emissions.