The New York State Senate has recently passed a bill to impose a two-year moratorium on new proof-of-work (PoW) mining projects like Bitcoin.
The Senate voted 36-27 in favor of the bill, which was passed by the state Assembly last month. The bill is supported by environmental groups, which ensured it didn’t die like its predecessor last year and reached the Senate floor for a vote.
The bill seeks to make it impossible for new crypto mining facilities that plan to use non-renewable energy sources, to set up shop in the state. It also includes plans to study the environmental effects of PoW mining during the moratorium.
Expectedly the crypto industry has mounted fierce opposition to the bill, with some calling it an attempt to stifle a blossoming industry. Others describe the bill as a bad policy that could have a cascading effect on the entire crypto industry. A few even think that the two-year moratorium could be extended into an outright ban.
The bill comes at a time when cryptos are already under a tremendous amount of pressure. But apart from the unfortunate timing, and bad optics, I don’t see the bill having any impact on the crypto mining industry.
For starters, the current bill is much narrower in scope than its failed predecessor, which wanted to impose a three-year moratorium on all crypto mining in the state. In contrast, the current bill only applies to new PoW operations that seek to use traditional carbon-based sources of power. It excludes operations that plan to use New York’s abundant and cheap hydroelectricity.
Crucially it applies only to new operations; existing ones, irrespective of their source of power, don’t need to bother.
Combined with the fact that a majority of the biggest bitcoin mining operations are located outside the US, I don’t see the bill having any impact on bitcoin mining. Yes, it sets a bad precedent, and could perhaps force operations looking to set up shop in New York to either move outside the state, or not use non-renewable energy (which is actually a good thing).
But even for any of these things to happen the bill must first get signed into law by New York Governor Kathy Hochul, who in a recent news conference said her team is currently deliberating on the bill, and the process could take over six months to complete!
Talk about much ado about nothing.