New York legislators passed a bill banning certain mining operations that depend on carbon-based power sources. This has caused a major blockage in the mining of proof-of-work (PoW).
What’s at stake?
The bill proposes a two year moratorium on certain cryptocurrency mining operations that use PoW (Proof of Work). PoW-based mining firms won’t have the ability to expand their operations for two years if it passes unless they switch over to 100% renewable energy. These entities will not be allowed to renew permits for the same time. On the other hand, new market entrants would not be permitted to establish their base.
In April, the bill was passed first by the state assembly. It was passed by the state assembly in April. A month later it received 36-27 support from the New York State Senate. Its main purpose is to reduce New York’s carbon footprint. This was stated by those who supported it. It is now on the desk of New York Governor Kathy Hochul, who could sign it or veto.
After China placed new restrictions on Bitcoin mining last January, it all began. Several mining companies have opened shops around the world, searching for more friendly jurisdictions. New York quickly established itself as a major PoW mining hub, thanks to its abundant hydroelectricity and the ability to revive old fossil fuel plants.
This resurgence triggered significant backlash from both residents and environmental advocates, who are concerned about the network’s energy consumption.
The cryptocurrency players have reacted with anger to the bill. Many fear that New York will be left out of the lucrative opportunities offered by Bitcoin mining for economic growth and the development of renewable energy if the bill becomes law. Others argue that the bill will be a model for other states and create a precedent, which could lead to a chain reaction. Kevin O’Leary, a prominent investor, even called the state uninvestable.
The US currently hosts 38% all Bitcoin miners worldwide. It can be difficult to transition abruptly from 100% renewable energy.
It is interesting to note that New York has passed a two year moratorium on the construction of new Bitcoin mining facilities. KenGen, however, announced plans to supply its surplus geothermal energy to Bitcoin miners.
Marla Brooks – Financial Analysis
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