Regulatory Uncertainty Leads to NY Bitcoin Miners Giving up on The State

Key Takeaways:

  • As the state government contemplates a bill to ban new mining projects that use carbon-based energy sources until an assessment of the industry’s environmental impact, bitcoin mining companies in New York are increasingly considering abandoning their goals in what was once a promised land.
  • In the context of the Climate Leadership and Community Protection Act (CLCPA) goals established in statute in 2019, the “PURPOSE OR GENERAL IDEA OF BILL” is to require the completion of a comprehensive generic environmental impact study of cryptocurrency mining operations using the proof-of-work methodology in the State of New York.
  • This bill sends a “clear message to the crypto industry that Nascent York is closed for business,” “sets a hazardous precedent,” and is an example of “government overreach” in that it restricts a new industry’s right to energy, therefore dooming it to failure.

Even against odds, Proof-of-Work has kept bitcoin alive for the past 13 years, with no instances of double-spending confirmed. Because those who spend energy to verify transactions have a significant incentive to keep the ledger clean, and because PoW makes creating a block punishingly expensive, the bitcoin network’s security is stronger than it’s ever been.

Proof-of-work is regarded as a wonder by  Bitcoin maximalists.  However, critics have continued to criticize PoW, with many considering the industrial-scale usage of computing and electrical resources to be wasteful. The big bitcoin energy argument has erupted.

In a similar vein, bitcoin mining companies in New York are increasingly considering abandoning their plans in what was once a land of promised opportunity, as the state legislature perceives a bill that would prohibit new mining projects that use carbon-based energy sources pending an assessment of the industry’s ecological and environmental consequences.

Bill Status
Bill Status

Following the passage of the Assembly version of the law by the state’s lower house last month, the state Senate is considering a bill that would impose a two-year embargo on new crypto mining projects that use gas, coal, or other nonrenewable energy sources.

“Due to the political and regulatory uncertainties in New York, all cryptocurrency startups have a permanent hold on launching enterprises.” “If the bill passes, New York will become a permanent afterthought for the sector,” Kyle Schneps, director of public policy at Foundry, one of the country’s largest mines, warned. Digital Currency Group, which owns CoinDesk, owns Foundry.

Bill Details
Bill Details

This bill Establishes a prohibition on cryptocurrency mining businesses that authenticate blockchain transactions using proof-of-work authentication mechanisms.

The bill’s title refers to an act to amend the environment protection law in order to impose a blanket ban or a  “moratorium” on cryptocurrency mining operations that use proof-of-work 

authentication methods to validate blockchain transactions, as well as a requirement for a comprehensive generic environmental impact statement review.

 According to Whit Gibbs, CEO of Compass Mining, a platform that connects miners with investors overseas, most crypto mining companies are avoiding the state due to authorities’ ostensibly hostile posture against the industry.

Didar Bekbauov, the co-founder of Kazakhstan-based miner Xive.io, said he is leaning toward Texas because of favorable regulation and the availability of inexpensive electricity.

Since the bill is being talked out loud, Texas has been getting into conversations in a positive and hopeful light.

Fort Worth, Texas,  the first city government in the United States to mine bitcoin, and Mayor Mattie Parker oversaw the creation of a modest mining farm outside City Hall in an almost poetic dedication to the endeavor.

According to Schneps, this measure sends a “clear message to the crypto industry that New York is closed for business.” It “sets a dangerous precedent” and is an example of “government overreach” because it restricts a nascent industry’s right to energy, therefore dooming it to failure, he said.

While the bill mainly affects mining businesses that utilize fossil fuels, those that use renewable energy are wondering if they will be next, according to John Olsen, the Blockchain Association’s New York policy director. According to him, the bill’s original language called for a moratorium on all sorts of mining.

“Any form of statutory moratorium is dangerous because it can be increased or extended at any time,” Olsen added.

In a tweet, @Dennis Porter_ expressed his displeasure with the measure, saying, If NY passes their prohibition on Bitcoin mining, they will not harm bitcoin; they will signal to the world that they are closed for business. Miners are unlikely to return.

As combative as the Twitter community has always been, this time was nothing new.  Many people backed Dennis up by reacting to his message with the same harsh-hostile tone.

Bitcoin, according to @JeremyAFriedel, will not suffer, but New York will.

Tell me NY doesn’t comprehend taxes without telling me they don’t, @87Xus said sarcastically.

@silento33244885 appears dissatisfied enough to declare that this city is an environmental concern.

Whatever actually does happen, cryptocurrencies and mining will almost certainly be front and center in the coming months, not only in the high energy discourse but also in the social and political debate over people’s rights to self-sovereign cryptocurrency, an argument that the sector will lead the way openly and productively.

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Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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