New York has now banned all proof-of-work block reward mining in the state that relies on carbon-based fuels. Governor Kathy Hochul signed a law passed earlier this year restricting mining based on non-renewable energy for the next two years.
In a legal document announcing her signing of the law, Bochum called it "an important step for New York in addressing the global climate crisis".
The bill passed the state Assembly in April. Two months later, the Senate approved the bill, leaving it to Bochum to sign. She delayed signing the bill for months, despite arguments from both caucuses as to why she should side with them.
The new law, which took effect immediately after the governor signed it, prohibits the state from issuing permits to mining companies that rely on electricity generated from carbon-based fuels. It also requires the Department of Environmental Conservation to conduct an environmental impact study on Block Reward mining.
However, miners that rely on renewable energy can continue to operate and obtain new licenses.
'New York sets dangerous precedent' - miners criticize bill.
The digital currency industry has been united in its opposition to the bill since its passage in June.
"Not only will this limit the potential benefits of an emerging industry for regional economic and technological growth, including job creation, expertise, and innovation, but it will also create regulatory uncertainty and present policymakers with choices about how an emerging industry develops," Bryan Daugherty, Public Policy Director of BSV Blockchain, commented at the time.
Bochum's signing of the bill has sparked a new wave of criticism. Some, like Perianal Boring of the Chamber of Digital Commerce, believe it sets a dangerous precedent that the entire tech industry must unite against.
"The permit will set a dangerous precedent that will determine who can and cannot use electricity in New York State," she said in a statement.
Kevin Zhang, senior vice president at Foundry, an institutional digital assets firm, agrees with her. He believes that "not only is this a clear signal that New York is off-limits to Bitcoin miners, but it also sets a dangerous precedent for excluding a particular industry from energy use."
While the impact will be felt most by the block reward mining industry, some believe it is a short-sighted stopgap measure that will ultimately cost the state.
For one, it will leave New York behind other states that are implementing friendly regulations to attract more digital asset companies. Data from Foundry has shown that more and more companies are leaving New York and moving to Texas, Georgia, Wyoming, and other friendlier states.
"Our customers are discouraged from investing in New York State. Even if the $500 million of capital Foundry has invested in mining equipment, less than 5% has gone to New York because the political landscape is so unfriendly," Zhang told CNBC.
As capital leaves, there will be other knock-on effects. The first is job loss for a growing number of workers in New York who depend on these digital asset companies. According to Boring, whose Chamber of Digital Commerce lobbies on behalf of the bitcoin industry in the U.S., several unions oppose the law because it will have severe economic consequences.
"Bitcoin mining operations provide well-paying, high-quality, great jobs for local communities. At one of our members, the average wage is $80,000 a year," she said.
Bochum acknowledged in her statement that it is important for the state to continue to create economic opportunities for New Yorkers. However, she believes the environmental costs are too high a price to pay for the financial benefits.
Several mining companies are now expressing concern that other states may follow New York's lead and crack down on block reward miners. The Empire State is a trendsetter in the U.S., as its Bit License regulation has spawned similar regulations across the U.S., most recently in California.
Watch the BSV Global Blockchain Convention panel, Blockchain Mining, and Energy Innovation.
You must be logged in to post a comment.