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New York bitcoin mining moratorium proceeding through state house

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New York State Wants to Ban New Bitcoin Mining operations, a move feared by some industry insiders, could have a domino effect across the US

of SpecificationProof-of-work mining, which requires sophisticated equipment and large amounts of electricity, is used to create Bitcoin, ethereumat least for the next few months — I still use this method to protect my network.

Legislators backing the law say they seek to curb the state’s carbon footprint by cracking down on mining that uses electricity from power plants that burn fossil fuels. For two years, the permit will not be allowed to be extended or renewed unless the proof of work mining company uses 100% renewable energy and new entrants will not be allowed online.

The net effect of this, according to Galaxy Digital’s mining director Amanda Fabiano, is that companies will be forced to take jobs elsewhere, undermining New York’s economy.

“New York will be left behind, at best by other states, and at worst by other more progressive countries. New York is setting a bad precedent that other states may follow,” said the industry.

at this point, State legislature passed bill, and it is currently under consideration in the Democratic-controlled state Senate, which is expected to vote on the bill soon. If passed, you can land on Gov. Kathy Hochol’s desk and either sign the law or veto it.

“If this bill is passed, New York will be the first state to ban blockchain technology infrastructure in the country,” explains Perianne Boring. Founder and Chairman of the Digital Chamber of Commerce.

Love-hate relationship with virtual currency in NY

In some respects, New York offers a dream environment for Bitcoin miners.

Miners compete in a low-margin industry where energy is typically the only variable cost, so there is a strong economic incentive to move to the world’s cheapest power source (which tends to be renewable) . According to the most recent data available, one-third of electricity generated in New York State comes from renewable sources. U.S. Energy Information Administration dataNew York State is counting nuclear power plants towards its 100% carbon-free electricity target. generate more hydropower More than any other state east of the Rocky Mountains.

The state also has a cool climate, so less energy is required to cool the array of computers used for cryptocurrency mining and much of the abandoned industrial infrastructure ripe for reuse. increase. For example, cryptocurrency mining company Coinmint operates a facility at the former Alcoa aluminum smelter in Masséna, where the area’s abundant wind power and cheap electricity generated from dams along the St. is using The Massena site is billed as one of the largest Bitcoin mining facilities in the United States, with a transformer capacity of 435 megawatts.

But not all businesses run on renewable energy. Companies like Greenidge Generation, which operates bitcoin mining facilities in former coal mills converted for natural gas, have angered some lawmakers who are seeking to eradicate the state’s cryptocurrency mining industry.

The northern border town of Plattsburgh enacted its own law in 2018 to temporarily ban cryptocurrency mining operations, and just last year politicians tried to shut down parts of the mining industry statewide. The move failed after unions representing electrical workers came out to defend the mining industry.

However, this latest effort appears to have real teeth.

One section of the bill currently under consideration in Albany includes the state’s environmental impact of proof-of-work mining operations on New York’s ability to meet aggressive climate goals set under the Climate Leadership and Communities Protection Act. Includes conducting the entire survey.greenhouse gas emissions 85% reduction by 2050Boring told CNBC that the recent surge in support for this year’s proposed ban has a lot to do with this mandate to transition to sustainable energy.

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“Proof of work mining has the potential to lead the global transition to more sustainable energy,” Boring told CNBC’s Crypto World, pointing to the irony of the moratorium. did. “The bitcoin mining industry actually leads when it comes to compliance with that law.”

The sustainable energy mix of the global bitcoin mining industry today is estimated to be just under 60%, and the Digital Chamber of Commerce says its members mining in New York State have a sustainable electricity mix close to 80%. I discovered that

“New York’s regulatory environment not only puts a halt to their goal of carbon-based fuel-proof-of-work mining, but the regulation could become more pervasive, so new renewable energy-based miners are coming to the state. It could discourage people from doing business with,” said John Warren, CEO of an institutional-grade Bitcoin mining company. gem mining.

In a conversation at the Bitcoin 2022 conference in Miami last month, former presidential candidate and New Yorker Andrew Yang told CNBC that speaking to people in the industry, mining operations will develop demand for renewable energy sources. said he found it useful.

“In my view, much of this will result in pushing activity elsewhere that may not meet the goals of policymakers,” Yang said.

Some in the industry don’t wait for legislators to issue a formal ban before taking action.

New York’s share of the Bitcoin mining network fell from 20% to 10% in a matter of months, according to data from digital currency company Foundry.

Foundry’s Kevin Zhang said:

“Even if a foundry puts $500 million in capital into a mining rig, less than 5% went to New York because of the unfriendly political climate,” Chan continued.

domino effect

If New York passes a moratorium on cryptocurrency mining, there could be many follow-on effects.

Industry advocates not only potentially stifle investment in more sustainable energy sources, but each of these facilities also requires a large number of local vendors made up of electricians, engineers and construction workers. He told CNBC that it would have a huge financial impact. The outflow of cryptocurrency miners could lead to jobs and taxes moving out of state, according to experts.

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“There are many unions who are against this bill because it could have dire economic consequences,” Boring said. “Bitcoin mining operations provide the community with great, well-paid, high-quality jobs. One of our members earns an average annual income of $80,000.”

As Boring points out, New York is the leader when it comes to state law, so there’s also the potential for copycat phenomena to spread across the country.

“Other blue states often imitate New York, and this will give them an easy template to replicate,” said Chan, Foundry’s senior vice president of mining strategy.

“For sure, the network is fine. It survived a state-of-state attack from China last summer, but the implications for where the technology expands and develops in the future are huge,” Zhang said. continued.

But many others in the industry think concerns about the impact of the mining moratorium in New York are exaggerated.

Veteran bitcoin miners like Core Scientific co-founder Darin Feinstein say the industry already knows New York is generally hostile to crypto mining businesses. I’m here.

“There’s no reason to go to an area that doesn’t want you,” said Feinstein. “Bitcoin miners are really a data center business, and data centers need to be located in jurisdictions where they want to have data centers within their borders… If you ignore that, the consequences of doing You have to deal with… business in areas that don’t want your business.”

Feinstein and other miners point out that there are many more friendly jurisdictions. Georgia, North Carolina, North Dakota, Texas and Wyoming are all major mining areas.

Texas has crypto-friendly legislators, a deregulated power grid with real-time spot pricing, a significant surplus of renewable energy, and access to stranded or burnt natural gas. According to Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners, the leniency of state regulation for miners makes the industry very predictable.

“It’s a very attractive environment for miners to put a lot of capital into it,” he said. “The number of land deals and power purchase agreements in various stages of negotiation is staggering.”

Texas Blockchain Council Chairman Lee Blacher told CNBC that if New York sends the bill to the governor’s desk, New York’s hashrate (used to describe the collective computational power of the Bitcoin network) industry term) will only flow to other jurisdictions within the United States. We understand the job creation, tax revenue, and benefits that Bitcoin miners bring to members of renewable energy generation incentives.

Senator Cynthia Lummis (R-Wyoming) describes the attraction of mining to her state.

“My state exports a lot of energy, both hydrocarbon energy and green energy. We need to use more of that energy in our state to produce bitcoin.” Supply gas.

“When China banned bitcoin mining, it actually proved a benefit here in the US in terms of miners moving,” Lummis continued. China bans entire industry nationwide in May 2021.

Feinstein told CNBC that if New York wants to take a similar approach by banning the industry, “it’s going to be an American economy that wants to adopt the most important economic and financial accounting technology ever invented by humans.” It’s a gift to all the other states,” he said.

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