Crypto companies club together to oppose a bill that the responsible lawmaker says only affects a small proportion of the crypto mining community in New York.
A new bill sitting on the desk of New York governor Kathy Hochul to limit certain types of cryptocurrency mining has been widely misunderstood, according to State Assemblymember Anna Kelles.
“It’s important to understand that it’s not a ban,” Kelles told CNBC on June 3, 2022.
Kelles penned and sponsored a bill that would limit certain types of cryptocurrency mining in New York State for two years. She stresses that the three-page bill sets its sights on curbing certain mining activities that harm the environment.
The new law targets miners mining using the proof-of-work consensus mechanism to mine bitcoin and Ethereum. The miners must be using fossil fuel energy to power the energy-intensive process of creating new bitcoin or Ethereum and validating transactions on their respective networks. The bill seeks to prevent the renewal and expansion of existing permits and stop the issue of licenses to new miners.
How the bill came about
Bitcoin mining typically consumes large amounts of electricity, driving miners to locations where energy is cheap and abundant. Some miners have chosen to resurrect abandoned fossil fuel facilities to power their operations. Atlas Holdings purchased an abandoned coal-fired power generation plant in the Finger Lakes region of New York, which was initially converted into a natural gas plant and then a bitcoin mining facility. The reactivation of the plant prompted the drafting of the two-year moratorium bill now sitting on the governor’s desk.
“If there is a cryptocurrency mining operation like there is one in Syracuse, where there are thousands of cryptocurrency mining computer processors, and they are directly tied into the grid: It is not a moratorium bill on that facility,” Kelles elaborated. The bill will exempt small-scale mining operations running “four, five, ten, twenty computers in their basement.”
Crypto industry skeptical
The crypto industry is not jumping for joy yet. Some players are concerned that the moratorium bill could provide a basis for “regulatory creep.” “In the end, this is sending a message to miners to stay away from New York because these are only the first steps in what may become a wholesale ban of mining in the state,” opines Peter Thiel from mining company Marathon Digital. Thiel says no company will want to invest in expensive mining equipment, only to relocate after two years.
The Blockchain Association and the Blockchain Security Industry Coalition have set up lobbying efforts in Albany, the state capital.
Kelles is unperturbed by industry protestations. Ultimately, she opines, such sentiments are not dissimilar to those of the oil and gas industry, which bemoans that similar bans hamper free trade and commerce. And mining companies, like oil and gas companies, are ultimately interested in profits.