New York enacts 2-year ban on certain crypto-mining operations

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New York has become the first state to enact a temporary ban on new cryptocurrency mining permits at fossil fuel plants, a move aimed at addressing environmental concerns about energy-intensive activity.

Legislation signed by Governor Kathy Hochul on Tuesday was the latest setback in a deadly month for the cryptocurrency industry, which had lobbied fiercely against the bill but was unable to overcome. a successful push by a coalition of leftist lawmakers and environmental activists.

The legislation will impose a two-year moratorium on crypto-mining companies seeking new permits to turn some of the state’s oldest and dirtiest fossil fuel plants into digital mining operations. It also demands that New York study the industry’s impact on the state’s efforts to reduce its greenhouse gas emissions.

The move to New York comes months after some other states adopted more industry-friendly policies, offering tax incentives in hopes of attracting crypto mining operations after China clamped down on activity. Last year.

But it also comes at a time of intense turbulence, and a potential crossroads, for the cryptocurrency industry.

Earlier this month, the crypto exchange known as FTX suffered a rapid and public collapse that led to its declaration of bankruptcy. The downfall of what had been a trusted player in the new market led to wider questions about the future of the exchange, as well as possible criminal charges against its director, Sam Bankman-Fried.

Mr Bankman-Fried was lobbying New York regulators to allow his exchange to operate in the state. He’s also a major Democratic donor who backed a super PAC that spent $1 million to boost Ms. Hochuls’ running mate Antonio Delgado in his primary race earlier this year.

The spending drew accusations from Ms Hochuls’ political opponents, who argued it was a signal that the industry was trying to use its leverage to pressure the governor to veto the mining moratorium.

The state legislature, which is controlled by Democrats, had passed the legislation in the dying hours of this year’s legislative session that ended in June, following successful lobbying efforts that also included winemakers and other concerned business owners in the upstate, where many of the existing mining operations are based.

For months, Ms Hochul had remained coy about whether she supported the bill, saying her office was reviewing the legislation and weighing fears a moratorium could hamper economic activity in the region. The temporary ban was strongly opposed by national cryptocurrency industry groups who lobbied the governor’s office, fearing that other states would follow New York’s lead and impose restrictions. moratoriums or other restrictions.

By distancing herself from the bill in the general election, Ms. Hochul avoided addressing a polarizing issue while facing a vigorous challenge from Representative Lee Zeldin, a Republican who opposed the bill, the calling it anti-business.

Ms. Hochul, a Buffalo Democrat, narrowly beat Mr. Zeldin two weeks ago. Since then, she has considered the hundreds of bills she must decide to sign or veto before the end of the year, including the moratorium.

In a memo explaining her support for the bill on Tuesday, Hochul said that as the first upstate governor in nearly a century, she recognizes the importance of creating economic opportunity in communities that were left behind.

But she said the bill is a key step for New York as we work to address the global climate crisis.

Bitcoin mining, the process by which powerful computers solve complex mathematical equations to validate transactions, is a crucial part of the cryptocurrency economy. And while hobbyists could once mine coins at home, the complexity of the equations and the energy required to solve them have skyrocketed with Bitcoin’s growing popularity and value.

But climate advocates have long said the value of crypto mining operations isn’t worth the environmental costs. The process requires an immense amount of electricity, so much so that China banned the practice last year in a bid to meet its climate goals.

In a statement, the Chamber of Digital Commerce, a crypto advocacy group, denounced the bill as unfairly targeting the cryptocurrency industry, saying: To date, no other industry in the state has was sidelined like this for its energy consumption. This is a dangerous precedent to set for who can or cannot use the power.

Proponents of the bill stressed that the legislation will not impact existing mining facilities or stop all crypto-mining activities in the state, only those that seek permits to refuel power plants at fossil fuels, leaving those that connect directly to the electricity grid or use renewable energy. unaffected sources.

Supporters of the legislation celebrated its signing on Tuesday, presenting it as a sign of hope that New York’s decision will set the tone for other states that may be considering regulation.

This bill will create the break we need in the current trend of buying old power plants in New York for corporate profits and allow us to properly assess the impact of this industry on our climate goals before it it’s not too late, said Congresswoman Anna Kelles, a Democrat. who sponsored the bill in the lower house, said in a statement Tuesday. Reactivating old, retired power plants that use fossil fuels as their power source is a step in the wrong direction and we cannot afford to go back.

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