New York is the first state to ban certain types of crypto mining
New York just became the first state to ban certain types of cryptocurrency mining in an effort to address environmental worries over the energy-intensive process.
“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,” New York Governor Kathy Hochul said in a message after signing the legislation into law on Nov. 22.
The new law temporarily freezes the issuance and renewal of air permits to companies that have transformed some of the state’s oldest fossil fuel plants into cryptocurrency mining hubs.
But the ban doesn’t impact individual cryptocurrency miners.
The legislation is specifically aimed at cryptocurrency mining companies in the state that consume large amounts of energy by utilizing “proof-of-work” authentication — the process that uses sometimes millions of high-powered computers to track and secure transactions in bitcoin and other virtual currencies.
Mining crypto can produce harmful emissions by generating electricity through burning coal, natural gas and other fossil fuels.
After China began cracking down on bitcoin mining in 2021, upstate New York became a popular hub for digital currency mining due to the availability of cheap energy derived from Niagara Falls and shuttered power plants.
However, as companies flocked to the region, climate advocates began ringing the alarm over crypto mining’s potential environmental harm.
“Not only does crypto take a toll on the environment, but communities in upstate New York could suffer as once-abandoned coal power plants come back from the dead as ‘zombie plants’ that mine crypto all day, every day,” Richard Schrader, the New York Legislative and Policy Director for the non-profit Natural Resources Defense Council said in a statement.
The new law also requires New York’s Department of Environmental Conservation to examine the crypto mining industry’s impact on the environment during the two-year moratorium as the state seeks to reduce its carbon footprint.
On a national level, U.S. crypto mining produced about 25 to 50 million metric tons of carbon pollution according to a White House report. That’s roughly the equivalent of driving 20 to 40 million gasoline-powered cars for one year according to the Environmental Protection Agency.
The crypto industry has attempted to address concerns about its energy consumption and carbon emissions.
In September, Ethereum, the largest blockchain behind bitcoin switched to a more energy efficient method of validating crypto transactions that take place on the platform, known as proof-of-stake (PoS).
This upgrade is expected to lower Ethereum’s carbon footprint by over 99% according to its website.
Want to earn more and work less? Register for the free CNBC Make It: Your Money virtual event on Dec. 13 at 12 p.m. ET to learn from money masters how you can increase your earning power.