New York Law Cracks Down On Bitcoin Mining
As expected, Governor Kathy Hochul has signed into law a moratorium on Bitcoin mining in New York. The law is the first of its kind and raises far-reaching questions.
Specifically, Hochul signed a bill that bans new Bitcoin mining operations that use carbon-based energy sources. However, because the bill is narrowly drawn, the state’s dozen or so operations that draw power from the grid are not affected.
Nor are solo miners affected. In addition, the moratorium does not apply to new or renewed permits if the company has already filed paperwork to operate in New York. However, Bitcoin miners that do not use 100% renewable energy will not be allowed to expand or renew its permits within the next two years.
“This is the first regulation of its kind in the country,” Hochul said in the legislative order, adding that this is an important step for New York as the state seeks to reduce its carbon footprint.
As CNBC has learned from industry insiders, there is now concern in Bitcoin mining circles that other Democratic U.S. states could follow New York’s lead. The Chamber of Digital Commerce wrote in a statement that the approval “could set a dangerous precedent”.
Kevin Zhang of Foundry, which manages the world’s largest BTC mining pool by total hash rate, Foundry USA, agreed with the Chamber of Digital Commerce that the law could send a dire signal to the industry.
“Other blue states often follow the lead of New York state and this would be giving them an easy template to replicate,” warned Zhang.
The mining industry in New York, however, has been quick to respond, migrating to other U.S. states. “Our customers are being scared off from investing in New York state,” Zhang continued.
With the states of Texas, Wyoming, Georgia, North Carolina and North Dakota, there are several friendlier jurisdictions in the US. Texas, in particular, is a role model for reasonable regulation and policies. Thus, the U.S. state offers an electric grid with real-time spot prices and access to surplus renewable energy as well as stranded or flared natural gas.
Remarkably, it was announced just yesterday that DCG subsidiary Foundry is buying two turnkey Bitcoin mining facilities from Compute North after the latter filed for Chapter 11 bankruptcy on September 22. In addition, Foundry is reserving the right to acquire a third site from the struggling Bitcoin mining company.
Why Is Hochul Leading A Shady Move Against Bitcoin?
Perianne Boring of the Chamber of Digital Commerce also warned against overstepping regulation. Boring told CNBC that Proof of Work has the potential to lead the global transition to more sustainable energy. “The Bitcoin mining industry is actually leading in terms of compliance with that Act,” she said.
As the Bitcoin Mining Council elicited in its latest report, 59.5% of all miners worldwide use a sustainable energy mix. According to the Chamber of Digital Commerce, the sustainable power mix for its members in New York State is as high as 80%.
As former presidential candidate and New Yorker Andrew Yang revealed at the Bitcoin Conference 2022, mining operations are even helping to drive demand for renewable energy.
“Banning Bitcoin mining in 2022 is like banning the internet in the 90’s,” signed Dennis Porter, CEO and Co-Founder of the Satoshi Act Fund and a key advocate for Bitcoin in DC.
The new law is also particularly questionable in light of the expansion of gambling in New York State. As the NYT reported, the state even wants to establish 24-hour casinos in NYC. As Kyle Schneps, Director of Public Policy at Foundry Services stated via Twitter, the energy consumption of sports betting and casinos far exceeds that of PoW mining in New York.
So why is @GovKathyHochul , NY leg & ESG lobby trying to ban Bitcoin, while at the same time encouraging gambling expansion across the state, even putting 24 hr casinos in NYC?
At press time, the Bitcoin price was trading near the key resistance zone at $16,600.