“We need to better understand what is happening and the benefits we have of operating crypto primarily against coal and gas plants in order to enforce environmental laws,” Megan Wachspress, staff attorney for the Sierra Club, said in an interview. being operated for.”
The New York law is “a really important initial step toward getting that information and understanding how cryptocurrency miners are turning coal and gas into bitcoin, fundamentally, and what the implications are,” he said. Told.
Environmental groups push for a temporary moratorium on some types of cryptocurrency mining in New York as old fossil fuel plants are brought back online or ramped up to run computers to earn cryptocurrency — a process that consumes an extraordinary amount of energy. uses. He also warned that the industry itself may not be able to adapt to the state’s new climate law that requires drastic reductions in emissions.
The law does not affect cryptocurrency mining which uses power drawn from the electric grid. Operations could continue at sites large and small across New York, including a former aluminum smelter in Massena near the Canadian border and a former coal plant in Somerset near Niagara Falls.
The partial ban comes as Upstate New York has become attractive to companies that mine digital currencies, including bitcoin. The region has an abundance of manufacturing sites with former power plants and unused electrical infrastructure that is attractive to industry.
Some bosses said the legislation is likely to deter companies from coming to New York for fear of further sanctions, and it comes as the digital currency market has also crashed following the bankruptcy of Bahamas-based crypto exchange FTX – with additional except uncertainty.
Cryptocurrency businesses are already directing their investments elsewhere, said Kyle Schnepps, The Foundry’s director of public policy. He said the Rochester-based bitcoin mining company has acquired two sites in other states and is focusing on investments there.
“The prevailing sentiment in the crypto industry now is that New York is prepared to use its climate targets to arbitrarily exclude any industry it finds politically expedient to target,” Schneps said.
“Any cryptocurrency company, whether proof-of-work or proof-of-stake, that is not already grandfathered by New York’s single crypto laws is unlikely to build its business in New York under current circumstances because no one knows where the chopping Who could be next on the block.”
The moratorium bill exempts only two power plants currently burning fossil fuels to power cryptocurrency miners, which have already submitted permit applications.
“The legislation has had no impact on our operations, and we continue to invest and create great jobs at our facility,” said David Fogel, CEO of Coinmint.
The new law has already affected one company.
CEO Alex Martini-LoManto said Blockfusion, which has a cryptocurrency mining facility in Niagara Falls that is currently inactive due to a city order, has lost insurance coverage due to the statewide moratorium despite not being affected. He supported the moratorium but said it should have gone further and barred fossil fuel plants from coming back online for any reason. BlockFusion, when it was working, ran on electricity from the grid, which is mainly hydroelectricity.
“It’s very much a circus – media and politics but very little impact,” Martini-Lomanto said. “This does not change bitcoin mining in New York… It has no retroactive effect.”
Cryptocurrency industry groups are alarmed by calls from environmental advocates to broaden the scope of the “proof of work” methodology underpinning bitcoin and push for similar action in other states. Miners engage in a global competition to solve the complex calculations that validate transactions in exchange for a fee. The approach is called “proof of work,” and the more computing power a mining operation has, the more fees it can earn. And that means a thirst for power.
“In some ways, all of the industry concerns about this bill and the rhetoric around it were valid,” said John Olsen, an Albany lobbyist for the Blockchain Association. “It’s not about the environmental impact from the work, it’s about the use of energy and whether it’s valid that that energy is for a specific operation.”
Greenidge, a former coal plant turned gas plant turned cryptocurrency mining site, continues to operate. The state Department of Environmental Protection rejected the renewal of one of the company’s major air permits in June, but under state administrative laws, the plant can remain operational pending an appeal. Greenidge is also seeking to renew its water permit.
Additionally, the Fortistar gas plant near a residential neighborhood in northern Tonawanda in Niagara County may be outfitted with storage container-like pods with cryptocurrency miners and fans. The facility, purchased by Toronto-based blockchain company DigiHost, has a Title V air permit application pending with the state DEC. The application has not yet been considered complete by the Agency.
Any new applications to run fossil fuel power plants for cryptocurrency mining will not be approved by DEC under the law.
The agency also has a large lift with a short timeline. The legislation directs the DEC to finalize a “general environmental impact statement” by November 22, considering a number of issues related to cryptocurrency mining, which uses the energy-intensive “proof of work” method that underpins bitcoin.
It sets a tight schedule as the law requires 120 days of public comment on this draft document and multiple hearings across the state.
The law asks DEC to analyze the number of “proof of work” cryptocurrency mining locations in the state, the amount and sources of energy used, greenhouse gas emissions from operations, and the potential impacts of any projected growth and mining expansion. The study will also consider water use and public health impacts.
The results and description of the end product of that process may lead to additional regulations for the industry from state legislatures. For example, a general environmental impact statement on hydraulic fracturing for natural gas was a key step toward New York’s prohibition on the practice in 2014 – also a first in the country at the time.
“We hope the DEC recommends the policy … and will determine whether or not this should be a special verification exercise, and if that aligns with our climate goals,” Moran said, adding New York’s emissions cap of 85 percent Said about the goal of reducing. 1990 level by 2050.
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