A few weeks after her election as New York’s first female governor, and a couple days before New Yorkers sat down to Thanksgiving dinner, Gov. Kathy Hochul on Nov. 22 finally signed an environmental conservation moratorium on new cryptocurrency mining operations, which both houses of state’s Legislature passed over the summer. (The bill’s progress was followed and reported on by ELM all year, most recently here.)
For two years, the law will disallow crypto mining companies from using the energy-intensive “proof-of-work” method to mint cryptocurrencies — (as explained further by ELM here) — unless the mining company uses 100-percent renewable energy. It is the first crypto mining moratorium in the United States.
The aim is to significantly slow the explosive growth of the crypto mining industry in upstate New York, which has led to increased emissions from the use of carbon-based fuels to perpetually run mining operations. Hochul explained that the law was necessary, given that the state’s goal is to vastly reduce its carbon footprint, largely through compliance with its Climate Leadership and Community Protection Act that seeks to cut New York’s carbon emissions by a whopping 85 percent by 2050, and is one of the most ambitious climate & clean-energy laws in the country.
The moratorium law also provides for a study to be undertaken by the New York Department of Environmental Conservation to assess the impacts of the crypto mining industry on the environment.
Crypto mining advocates, however, are not happy. They claim the law will scare off crypto businesses, which will be more attracted to other states to develop the burgeoning industry. That, they say, will leave New York with a hole in its local economy, which has historically been friendly to innovative financial tools, and send potentially lucrative jobs elsewhere, such as Texas, Wyoming, or North Dakota. Moreover, the advocates argue, crypto mining companies are at the forefront of developing renewable energy, so penalizing them for not meeting an unrealistic demand would actually make it more difficult to reach its renewables goals.
Hochul is unconvinced that crypto is the economic opportunity New York should invest in at the moment. In her statement announcing the bill’s signing, she acknowledged that, “As the first governor from upstate New York in nearly a century, I recognize the importance of creating economic opportunity in communities that have been left behind,” and promised to invest in future economic development projects. Furthermore, since New York, much like its neighbor New Jersey, often passes bills the rest of the states across the country eventually model their own legislation on, it is likely the case that more states will pass similar bills, giving crypto miners fewer options for development if they do not want to decrease their current energy needs.
This new development happened on the heels of the implosion of a large corner of the crypto market, with the spectacular collapse of the crypto exchange FTX before its merger with a competing crypto exchange, Binance.
FTX applied for bankruptcy protection last month, a mere 3-1/2 years after the well-known crypto company was founded. It is yet to be seen whether the industry-wide financial troubles will make it even easier for states to follow in New York’s footsteps and pass crypto-limiting legislation in a legislative environment friendlier to expanding environmental goals.