New York Gov. Kathy Hochul signed a two-year moratorium on Tuesday that will temporarily pause new permits for power plants that house the hardware to “mine” cryptocurrency.
The bill was passed in the state legislature over the summer but has been delayed by Hochul for several months.
“I am signing this legislation into law to build on New York’s nation-leading Climate Leadership and Community Protection Act,” Hochul wrote in a memo about the deal. “The most aggressive climate and clean energy law in the nation, while continuing our steadfast efforts to support economic development and job creation in upstate New York.”
New York state has become a notable home for crypto miners due to the availability of former power plants to house the hardware required for doing so, according to Politico.
The new bill is limited in scope because it does not stop the current crypto-mining operations set up in New York or limit individuals who wish to engage in the practice.
Hochul’s signing of the law will also spark a study by New York’s Department of Environmental Conservation to determine the specific effects of crypto mining on the environment.
Crypto mining has been accused of having an excessive effect on the environment due to how it consumes excess energy in the mining process. Bitcoin alone is responsible for 73 million tons of carbon dioxide a year, according to an estimate from Digiconomist. This is comparable to the amount of carbon produced by a small nation like Turkmenistan.
The industry has attempted to adapt to these claims by cutting power consumption through changes in the mining process. Ethereum, the second-largest cryptocurrency in the world, swapped to “proof of stake” for its mining this year. This decision will reportedly cut the currency’s carbon footprint by 99%.
Other states and governments have done the reverse of New York. Georgia has attempted to attract crypto miners by proposing legislation that would make selling electricity to miners tax-exempt. Illinois has proposed legislation to better define and regulate crypto mining. Oklahoma is considering providing sales tax exemptions to those purchasing relevant equipment.
Other countries have gone all in. El Salvador has completely embraced cryptocurrency and declared Bitcoin its official tender.
In an op-ed with the Wall Street Journal, Sen. Elizabeth Warren (D-MA) warned that in the wake of the FTX scandal, crypto needs to be regulated or it could cause economic catastrophe.
“FTX’s implosion should be a wake-up call. Regulators must enforce the law before more people get cheated, and Congress must plug the remaining holes in our regulatory structure — before the next crypto catastrophe takes down our economy,” she wrote.