The Bitcoin mining boom in New York state hit a roadblock when the state Senate passed a law that would halt new permits for certain fossil fuel power plants for use in Bitcoin mining. The measure, which also marks the start of an investigation into the environmental impact of mining facilities in the state, was passed in the State Assembly earlier this year.
Promising new jobs, the crypto industry had divided Senate Democrats on whether the moratorium would incur higher environmental or economic costs. Talks languished late into the evening as the state senate approached its legal deadline.
The bill will be put to the test again as it goes to Governor Kathy Hochul to sign or veto. Hochul last month received a $40,000 donation from a chief executive of a company that runs a former aluminum plant turned crypto mining facility. The New York Times recently reported.
After China put new restrictions on bitcoin mining last year, many mining operations have settled in the US. New York, with abundant hydroelectricity and retired fossil fuel plants that can be restarted to mine Bitcoin, quickly became a new hub for Bitcoin mining.
That fossil fuel revival has sparked backlash from some residents and environmental advocates. They fear that revived fossil fuel factories, with the help of Bitcoin, will damage ecosystems and derail the state’s efforts to tackle climate change.
The bill brought forward today imposes a two-year moratorium on new licenses for cryptocurrency mining activities that use a particularly energy-consuming approach to verify transactions on the blockchain. The approach, called proof-of-work, supports the two largest cryptocurrencies: Bitcoin and Ethereum.
With proof-of-work, “miners” use special hardware to solve complex puzzles, and in return they earn crypto tokens. The process takes a lot of energy. If the Bitcoin network were its own, it would rank 32nd in the world (between Argentina and the Netherlands) in terms of annual electricity consumption.
That demand for energy threatens the climate goals set by New York State in 2019, with the state committing to cut greenhouse gas emissions by 85 percent by 2050.
Greenidge Generating Station in New York’s Finger Lakes region has become a particular flashpoint for residents concerned about the environmental impact of cryptocurrency mining. Starting out as a coal-fired power plant, Greenidge was revamped to run on gas and converted into almost full-time Bitcoin mining in 2020.
The moratorium on Bitcoin mining won’t apply to Greenidge as it targets fossil fuel plant filings new ones applying for permits to use energy to mine proof-of-work-based cryptocurrencies instead of sending that energy to the grid. The account also won’t stop operations that run on renewable energy or use a less energy-intensive proof-of-work alternative that many other cryptocurrencies use to verify transactions.