According to legislation Governor Kathy Hochul signed on Tuesday, New York is taking a pioneering national move to put the brakes on the growth of cryptocurrency mining.
Following the collapse of the FTX exchange earlier this month, the cryptocurrency industry has come under increased scrutiny.
However, the legislation in New York, which the state Legislature approved in June, mainly focuses on cryptocurrency’s environmental implications.
“I will ensure that New York continues to be the center of financial innovation while also taking important steps to prioritize the protection of our environment,” Hochul, a Democrat, said.
The term “proof-of-work” cryptocurrency mining refers to the computational process that records and secures transactions in bitcoin and similar forms of digital currency.
The new law places a two-year moratorium on new and renewed air permits for fossil fuel power plants used for energy-intensive “proof-of-work” cryptocurrency mining.
The blockchain-based mechanism known as “proof-of-work” powers bitcoin and specific other cryptocurrencies.
According to the law, the Department of Environmental Conservation must evaluate how cryptomining affects the state’s capacity to achieve its climate goals.
Environmentalists claimed New York was undercutting their objectives by allowing cryptomining businesses to operate their own natural gas-burning power facilities.
Meanwhile, proponents of cryptocurrencies claimed that the law would hinder New York’s economic growth and singled out cryptocurrencies while failing to address other forms of fossil fuel use.
Computers with specific hardware are needed for cryptocurrency mining, which uses a lot of electricity.
According to one analysis, as of November 2018, the yearly electricity consumption of bitcoin was similar to that of Hong Kong in 2019.
Some miners are trying to find ways to generate the necessary electricity with fewer fossil fuels.