[TL;DR]

A New York state bill seeking to ban Proof of Work cryptos when it comes to local mining efforts went into its final stage of voting before it can be passed and become official law in the American state. The bank seeks to reduce carbon emissions in the state, as environmentalists bring concerns related to PoW mining - an issue under intense debate over the past two years. In order for New York to reduce its carbon emissions to zero by 2050 as part of an environmental act, it is leading a crackdown on several sectors including crypto.

The ban, however, may only last two years, with New York state evaluating just how significant of an impact crypto mining has on the state’s general carbon emissions. After the period, two local departments will provide a thorough report on the matter so the state can decide how to proceed.

Despite bans being negative for crypto adoption and development as a whole, this environmental bill actually showed that regulators are acquiring a deeper understanding of cryptocurrencies - by using and explaining Proof of Work terms - and providing a more balanced perspective on the issue - such as a two-year ban to analyze data instead of seeking a permanent solution that may not be necessary.

Keywords: new york bill, ban on crypto mining, crypto mining, proof of work ban, proof of work mining, carbon emissions, bitcoin mining, mining ban, pow ban, cryptocurrency mining, cryptocurrency ban, china banned crypto mining

[Full Article]

A New York bill seeking to ban Proof of Work cryptos when it comes to local mining efforts went into its final stage of voting before it can be passed and become official law in the American state. Proof of Work cryptocurrencies are part of the first blockchain consensus mechanism, where computational power solves complex mathematical problems to verify transactions and gets rewarded in the network’s cryptocurrency; such process has been named “mining.”

The last update on the matter was in June of 2021, when the bill had just passed the New York State Senate. Under the code reference A7389C, the bill seeks to ban all PoW crypto mining in the state and prevent current local mining facilities from renewing their licenses for at least the next two years.

In this article, we explain why the controversial bill has been put forward and a summary of the main concerns and points contained in the document.

What is the reasoning behind the bill?

The reason why A7389C was created and moving forward comes from two lines of thought that intersect. For starters, environmentalists are very concerned about the effects that crypto mining has on carbon emissions. Over the past few years, especially after China banned crypto mining in May of 2021, there has been a resounding debate on how much energy it takes to mine Proof of Work cryptocurrencies - more specifically bitcoin. Despite several reports showing that more than half of the energy used to mine bitcoin is already environmentally sustainable, the crackdown against the practice focuses heavily on global fossil-fuel use and carbon emission, comparing the energy used for bitcoin to that of countries such as Argentina and the Netherlands.

The second, more local point, focuses on carbon emission and fossil use as a whole for the state of New York. In order to reach its carbon emission goals for the upcoming years, state representatives and environmentalists fear that crypto mining will cause a major negative impact on the atmosphere - moving New York further from accomplishing the desired results. To provide a full crackdown on the matter, the bill does not focus on only fossil-based PoW crypto mining, but PoW mining as a whole.

The bill is more straightforward than most when it comes to cryptocurrencies meeting regulatory efforts. First published on May 6th of 2021, it provides some punchy insights on what are the main concerns for the New York state on why Proof of Work mining must be banned for at least a couple of years. Here are the highlights of the document, and see whether you agree with the proposal or not.

During the first portion of the bill, little is said about crypto itself but how it is the policy of New York to “conserve, improve and protect its natural resources and environment and to prevent, abate and control water, land and air pollution, in order to enhance the health, safety and welfare of the people of the state and their overall economic and social well-being.”

Citing several health hazards and economical issues that arise from climate change, the bill references the Climate Leadership and Comunity Protection Act which the state is a part of - it requires net-zero carbon emissions and 85% less greenhouse gas emissions by 2050. Since crypto mining from Proof of Work blockchains requires a lot of energy, the logic is that they shall be banned to avoid more emissions and therefore move closer to the goal of the environmental act for 2050.

Earlier in this piece, it was mentioned that the ban is for at least two years, while the goal is to reduce carbon emissions to zero by 2050 - with other efforts as well, of course. The reason the ban might only last two years is that the New York state wants to evaluate how significant of an impact crypto mining has on the state’s general carbon emissions. Once coming into effect, the results of the ban will be closely analyzed by the Department of Environmental Conservation and the Department of Public Service. Together, besides not providing permits to mining facilities in the next two years, they will gather data from carbon emission reduction related to the crypto practice.

By the end of the two-year term, both departments must prepare and submit a “generic environmental impact statement on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions.” Providing data such as electric energy per facility, water usage, anticipated increase, public health impacts, social and economic costs (or benefits) and more, the document will then be analyzed by the State of New York to reach a conclusion on whether the full ban shall continue, be tampered or removed completely.

Conclusion

Crypto bans of any kind are always negative for the ecosystem, yet the content present in this bill shows that regulators are actually moving in the right direction when it comes to a general understanding of cryptocurrencies and balanced judgement on issues. Not only did the bill use and explain Proof of Work terms to the Senate, but it also recognized that benefits might arise from crypto mining that may not have been under consideration before. Not only that, but it made it clear that the ban is only temporary and a way to assess the actual impact that PoW fossil-based mining has on the environment. Although the bill could have been quite more specific - such as only banning crypto mining facilities that use fossil fuel - it’s still a clear sign that regulators are being more reasonable with cryptocurrencies. Hopefully, it passes with some amendments and not as it is in case the bill is accepted, but only time will tell.

Author: Gate.io Researcher: Victor Bastos

* This article represents only the views of the researcher and does not constitute any investment suggestions.

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