New York Senate has passed a bill that established moratorium on cryptocurrency mining that uses Proof-of-Work method of verifying crypto blockchain transactions.
Though the law has been passed by the lawmakers but to be enforced it has to be approved by the Governor of New York, Kathy Hochul to whom the bill has been sent for approval. Governor has to power to either grant approval or veto the same.
It will be interesting to see what decision Governor Hochul will take as according to a report in The Verge, Governor “Hochul received a $40,000 donation last month from a chief executive of a company that runs a former aluminum plant turned cryptomining facility.”
The main reason for law banning crypto mining in New York is environmental concerns due to high level of energy usage in crypto mining during proof of work for authentication of crypto transactions.
Mining of cryptocurrency is an energy consuming process. Bitcoin, which is the most popular crypto currency, works on proof of work (pow) protocol. A large number of computers work together in order to mine a new set of Bitcoins. These computers consume enormous amount of electrical energy. For producing electrical energy, power plants using fossil fuel generate high levels of pollution.
New York legislators were pushing for the ban on crypto mining to reduce carbon footprints due to pollution caused by power plants using fossil fuels. The law if comes into effect would be applicable to that cryptomining which uses power produced from fossil fuel using power plants. However, companies using power for its crypto operations from power plants based on renewable energy processes like hydro, solar, or wind based plants, are exempt from the ban.
The crypto companies using non-renewable energy sources will not able to establish their operations for two years and those already established in New York will not be able expand or renew their operations after the law comes into effect.
As expected, crypto mining lobby has started with its campaign of criticizing the law banning crypto mining using power from environment harming power plants saying that will adversely affect the job prospects of New York workforce as crypto companies would then be forced to shift their operations to some other state where there is no such restrictions on using power from fossil fuel.
Another concern being expressed by crypto companies relate to fear that such a law passed by New York Senate may be replicated by other legislatures as well as other states in USA may tend to follow the example set by New York Senate.
Such is the power consumption by crypto mining that “power consumption by Bitcoin mining is more than electricity consumed by nations like Finland or Argentina.”
Sensing the enormity of the power consumption and environmental issues, some countries like Uzbekistan, a country in Central Asia, has decided to permit the companies to mine cryptocurrencies using solar energy.
