Earlier this week, the New York State Assembly Environmental Protection Committee approved a new bill to ban Bitcoin (BTC) mining for two years. The vice tightens on the mining.
- A moratorium for “proof of work” mining
- A necessity to preserve the environment?
- Several steps to go through before adoption
Mining – a process for validating transactions made on a blockchain – and ecology do not seem to go well together in New York State. In any case, this is what the Assembly's Environmental Protection Committee is defending on Tuesday, March 22. Gathered around the table, its members voted in favor of a new bill that would impose a two-year moratorium on cryptocurrency mining operations.
A Moratorium Intended For “Proof Of Work” Mining
This ban is aimed in particular at mining based on the “proof of work” authentication method. In a blockchain that uses this protocol, only the answer to a complex equation allows transactions to be validated. The miners, in competition, will use the computing power of their computers to solve it. This leads to very high energy consumption! This is where the shoe pinches for climate defenders who strongly criticize this type of mining.
The date of this meeting is not insignificant. Indeed, it comes ten days before the end of March, the deadline for the Assembly of the State of New York to decide on the granting of a permit to pollute Greenidge Generation Holdings Inc. This company owns a power plant in the upstate that provides electricity for mining cryptocurrencies, including the infamous Bitcoin.
A Necessity To Preserve The Environment?
Let us return to the tool of the miners, the computer. Do not imagine a simple computer station on which we would find Google Chrome and Word. Those who operate Bitcoin mining have become professionalized. They now need machines called "ASIC" whose sole purpose is to mine. These are computers that are 100 to 1000 times more powerful than normal. Consumption is therefore proportional, as are greenhouse gas emissions. A single cryptocurrency transaction is equivalent to the energy consumption of an American family for a month. Now visualize a mining farm with thousands of computers running 24/7.
Aware of this ecological reality, Senator Kévin Parker launched the idea of banning cryptocurrency mining in May 2021. He relied in particular on a climate law signed in New York in 2019 inviting to reduce the greenhouse gas emissions. The Democrat has called for a 3-year suspension of mining to assess environmental risks. A necessity given the location of Seneca Lake. Located near the factory operated by Greenidge (which uses the water to cool its computers), the lake has largely warmed up. So much so that summer water activities, very popular, have become almost impossible. Concerns also relate to the fauna and flora of the site.
Several Steps To Take Before Adoption
Despite this, the senator's enterprise came up against the Senate, which amended the bill. The 3-year suspension has been lifted and only companies using "green" energy will be allowed to mine. However, this law must still be voted on by the New York Assembly (the other component of the State Parliament, along with the Senate), and then signed by the governor. It is to restart the machine that the Environmental Protection Committee is today proposing a new bill.
The fight is not won but hope is allowed. Indeed, environmental defenders could count on significant support. This is the mayor of the New York metropolis, Eric Adams. The latter sees Bitcoin as an opportunity for his city. And wants the Big Apple to become THE center of crypto trading in the world. But it is hostile to mining. Moreover, if we take a closer look at the composition of the Environmental Protection Committee that approved the bill, eight out of eleven senators belong to the Democratic Party. This political party has a majority in both the Senate and the New York Assembly. Enough to tip the balance? Which economy or ecology will win in New York State? Case to follow.