New York has cryptocurrency mining strictly regulated due to the urgency of climate change. According to recent World Meteorological Organization projections, a “vital breaking point” will be reached within the next five years. There isn’t much time left to take decisive action. We can’t afford to fail to meet New York State’s climate targets.
However, if the crypto mining sector grows in New York, the energy it consumes might seriously jeopardize the state’s climate goals. Therefore, the state legislature has enacted a landmark environmental bill aimed at slowing the expansion of cryptocurrency mining businesses that use fossil fuels in New York.
The state Senate adopted a carefully awaited bill early Friday. The bill will impose a two-year suspension on new and renewal air licenses for fossil fuel power plants used for energy-intensive “proof-of-work” crypto mining.
To fuel the computers, these “mining” processes need massive quantities of energy. Across the state, the most inefficient, aging, and decommissioned fossil-fuel power facilities are in danger of being acquired and restarted to supply cheap electricity for Proof-of-Work-based cryptocurrency mining operations 365 days a year.
The law, which backers claim is the first of its sort, will now be considered by Democratic Gov. Kathy Hochul. The governor has stated that any law must balance economic and environmental issues. Natural gas-burning power plants used for crypto mining operations, according to environmentalists who advocated for the law, endanger the state’s capacity to fulfil long-term climate goals.
How Does Cryptocurrency Mining Work?
To avoid fraudulent transactions, digital currencies require verification. The approach with the highest energy requirements is proof-of-work. Complex mathematical problems are assigned to each transaction under PoW authentication, and miners compete to solve them. The first person to answer an equation validates the transaction and receives cash in exchange for their efforts. Brute force is the only way to solve the equation. Hence, the individual or corporation with the most computational power gets the most cash. With some currencies worth more than $36,000 per coin. Although in a very speculative market, a worldwide digital gold rush is underway, with hundreds of millions of computers fighting for a competitive advantage.
Crypto mining corporations are under pressure to discover ever-cheaper sources of electricity in order to maximize revenues. New York State has spent years increasing the efficiency of its electricity infrastructure in order to combat climate change. However, it has left a backdoor open by leaving these old, decommissioned power plants. With the plants fully operational for in-house Proof-of-work crypto mining and freshwater as a free coolant. It will offer cheap energy and efficient coolant systems that will allow private corporations. Frequent backing by private equity firms enables its growth at the expense of state climate targets.
According to one analysis, bitcoin’s yearly power use in November 2018 was similar to Hong Kong’s in 2019. According to environmentalists who advocated for the law, natural gas-burning power plants used for crypto mining operations endanger the state’s capacity to fulfil long-term climate goals. The bill would also compel the state Department of Environmental Conservation to conduct an environmental impact study to determine how crypto mining impacts the state’s ability to reach its climate objectives.