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On Tuesday night, the New York State Assembly voted to put a two-year moratorium on Bitcoin mining until the state can figure out how it will affect the environment.

The news broke on Twitter:

State Senate Democrats are in charge of that body. The bill will now go to the State Senate. As soon as it passes, it will almost certainly be the most important law of its kind in the world. Here is a long background piece that James Ledbetter's FIN put out on March 27:

The Green War on Bitcoin Mining is getting more and more ground.

A lot of proposals have been made to stop or limit the mining of cryptocurrency on environmental grounds. FIN has written about this a lot. People say that the huge amount of electricity needed to mine Bitcoin and other "proof of work"-based currencies is at odds with many countries' and jurisdictions' stated goals to cut back on their carbon footprint. Besides, very little has been done on this front outside of China, and even there, the environmental rationale isn't clear. This month, a European Parliament committee didn't vote to put a mining moratorium on the table as part of a larger digital assets framework.

This week, there was a possible regulatory breakthrough. The New York State Assembly's environmental conservation committee approved a new version of a bill that died last year. The bill would put a two-year moratorium on mining proof-of-work cryptocurrency, like Bitcoin, which is almost certainly the most mined cryptocurrency in New York State. Is there a similar bill in the state Senate? If both pass, it doesn't seem like Governor Kathy Hochul, who was appointed last year and is running for her first "re-election" this year, could sign it into law. In a January Politico story, the office of New York Gov. Andrew Cuomo said she was "actively reviewing proposals about the role of cryptocurrency mining in New York's energy landscape," but she didn't say which bills she would back.

If this policy is made law, it could be a big deal even for people who live outside of New York. But the bill doesn't mean that there will be no proof of work crypto mining in New York for a while. It only means that there won't be permission to renew or get permission for any new permits. In addition, the bill only applies to permits for "electric generating facilities that use carbon-based fuel." Probably, some New York crypto mining is done with renewable energy and would not be affected.

However, New York's share of the Bitcoin mining pie is very big. This is true, but A crypto mining pool called Foundry USA released figures last year that show that New York has more Bitcoin hashrate than any other US state, with Kentucky, Georgia, and Texas not far behind. This is the collective computing power of all the miners in the country.

 

In New York's debate about crypto mining, Greenidge Generation, a company that can be bought and sold, is at the center. Greenidge runs a 107-megawatt natural gas plant in the Finger Lakes region to power its Bitcoin mining. This plant uses natural gas. The company says that it creates high-paying jobs in upstate New York and generates power for the local grid. It has the support of the local electrical workers' union, but many environmental groups, such as Seneca Lake Guardian and the Sierra Club, are against it. In December, Senator Elizabeth Warren sent Greenidge a scathing letter about how Bitcoin mining affects the environment and how much electricity it costs. (FIN tried to get an interview with Greenridge, but they didn't answer.)

 

As time goes on, New York State has been steadily building up the tools it could use to stop or slow down companies like Greenidge. New York Gov. Andrew Cuomo and the state's Department of Environmental Conservation (DEC) are already legally able to stop any new permits for crypto mining facilities, according to a white paper from Columbia University's Sabin Center for Climate Change Law. It took effect in 2020. The state's Climate Leadership and Community Protection Act says that statewide greenhouse gas emissions must be cut by 85 percent by 2050.

 

At least some of Greenidge's most important state permits were granted in 2016. They will need to be renewed in 2021. However, they don't say anything about Bitcoin mining, and it's not clear if Greenidge is following the law. It's true that last May, the state Department of Environmental Conservation wrote to Greenidge to say that Greenidge's application for a renewal was "incomplete." They also asked for more information about greenhouse gas emissions by September. Greenidge's renewal application is still being looked at by the DEC.

 

As FIN pointed out back in December, Greenidge, for all the attention it gets, isn't very big. There were 18,666 Bitcoins mined by Greenidge in 2021, and the company brought in $88 million from mining them. The company lost money this year, mostly because of a goodwill write-down in another part of its business, the recently bought Support.com. At the end of 2021, Bitcoin prices rose so high that Greenidge's crypto mining business was still profitable, but not in a crazy kind of way.

Plattsburgh, New York, became the first town in the United States to ban cryptocurrency mining in 2018. Coindesk this week published a postmortem on the town, which turned out to be 18 months long. These problems are going to happen all over the world as Bitcoin mining grows. That's what The Block said this week. Bitfinex and Tether, which make the world's biggest stablecoins, are going into the Bitcoin mining business, focusing mostly on Latin America and Europe. Currently, ExxonMobil has a pilot project in North Dakota where they use extra gas that would otherwise be burned off of oil wells to mine cryptocurrency. This program could be expanded to Alaska, Nigeria and other countries. It could also be made available in Germany. People in a lot of places are going to look at what New York State does as they try to balance the benefits of crypto mining with the need to cut down on greenhouse gas emissions.

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