© Provided by CNBCNew York is the first state to ban certain types of cryptocurrencies to address environmental issues related to the energy-intensive process.
“I will ensure that New York City remains a center of financial innovation and will also take important steps to prioritize protecting the environment,” New York Gov. Katie Hatchul said in a statement after the legislation was signed on Nov. 22.
The new law temporarily suspends the issuance and renewal of flight permits for companies that are turning some of the state's oldest fossil fuel power plants into cryptocurrency mining hubs.
However, the ban does not apply to individual cryptocurrency miners.
The law specifically targets cryptocurrency mining companies that consume a lot of energy through proof-of-work authentication, a process that sometimes uses millions of powerful computers to authorize, track, and secure transactions in bitcoin and other virtual currencies. currencies.
Cryptocurrency mining can create harmful emissions by burning coal, natural gas and other fossil fuels to generate electricity.
After China began cracking down on bitcoin mining in 2021, Niagara Falls outside of New York State became a popular digital currency mining hub due to cheap energy and shutdown power plants.
However, as companies flock to the region, climate advocates are sounding the alarm about the potential environmental damage from cryptocurrency mining.
“Not only is cryptocurrency damaging the environment, but communities in upstate New York could be hurt as once-abandoned coal-fired power plants are resurrected as ‘zombie factories’ that mine cryptocurrencies all day, every day.” — Richard Schroeder, director. legal department. and politics at the Natural Resources Defense Council, a New York City nonprofit, the statement said.
The new law also requires the New York City Department of Environmental Protection to investigate the environmental impact of the cryptocurrency mining industry during a two-year moratorium as the state seeks to reduce its carbon footprint.
U.S. cryptocurrency mining has caused 25 million to 50 million tons of carbon pollution across the country, according to a White House report. That's the equivalent of driving 20 to 40 million gasoline-powered cars a year, according to the Environmental Protection Agency.
The cryptocurrency industry has tried to solve the problems associated with energy consumption and carbon emissions.
In September, Ethereum, the largest blockchain behind Bitcoin, switched to a more energy-efficient method for verifying cryptocurrency transactions on a platform known as Proof of Stake (PoS).
According to its website, this upgrade is expected to reduce Ethereum's carbon footprint by over 99%.
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