New York bans new crypto mining power plants—for now

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New York is taking a first in the nation step to curb the spread of cryptocurrency mining, under legislation Gov. Kathy Hochul signed Tuesday.

The move comes amid growing scrutiny of the cryptocurrency industry after this month FTX exchange collapse. But the New York measure, which was approved by the state Legislature in June, specifically addresses the environmental aspects of cryptocurrencies.

“I will ensure that New York remains the center of financial innovation, while taking important steps to prioritize protecting our environment,” Hochul, a Democrat, said in a message explaining his approval.

The new law establishes a two-year moratorium on new and renewed air permits for fossil fuel power plants used for energy-intensive “proof-of-work” cryptocurrency mining, a term for the computational process that records and secures bitcoin and similar transactions. Forms of digital money. Proof of work is the blockchain-based algorithm used by bitcoin and some other cryptocurrencies.

The law also requires the Department of Environmental Conservation to assess how crypto mining affects the state’s ability to meet its climate goals.

Environmentalists said New York was undermining those goals by allowing crypto mining operations to run their own power plants that burn natural gas.

Meanwhile, cryptocurrency advocates argued that the move would hurt New York’s economic development and highlighted cryptocurrencies without addressing the use of other fossil fuels.

Cryptocurrency mining requires specialized computers that consume large amounts of power. One study calculated that as of November 2018, bitcoin’s annual electricity consumption was comparable to that of Hong Kong in 2019, according to the US Energy Information Administration.

Some miners are looking for ways to reduce their reliance on fossil fuels to produce the electricity they need.

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