The New York Senate has passed a bill that bans crypto mining operations that use carbon-based fuel to power their facilities.
The bill specifically is targeting proof-of-work mining, which is one of the two most popular mechanisms cryptocurrencies use to verify new transactions on the blockchain and make new tokens, but it uses a lot of energy to validate blockchain transactions.
Some of the most popular proof-of-work tokens include Bitcoin, Ethereum and Dogecoin.
The alternative, proof-of-stake, is when cryptocurrencies -- like ETH2.0 or Avalanche -- use staking to achieve the same thing for less energy and it is thought to be more efficient for scaling than proof-of-work.
The bill is an attempt by lawmakers to impede the state’s carbon footprint and “mitigate the current and future effects of climate change,” according to the bill.
“Cryptocurrency mining operations running proof-of-work authentication methods to validate blockchain transactions are an expanding industry in the State of New York,” it stated. The continued expansion of operations will “greatly increase the amount of energy usage” in the state, it added.
If it passes, all proof-of-work mining activity in the state that relies on burning fossil fuels will face a two-year ban. However, 100% renewable energy proof-of-work mining businesses will still be allowed to operate.
“Ultimately, this bill will hurt New York more than it will help, as these miners will increasingly cluster in states such as Texas, Tennessee, Washington State, and elsewhere that provide solar, wind, hydro and other sources of clean energy,” said Steven McClurg, co-founder and CIO of Valkyrie Investments, which oversees WGMI, the largest U.S.-based Bitcoin miners ETF.
The Senate voted 36-27 in favor of the bill after passing it through the New York State Assembly in April. It now moves to the desk of New York Governor Kathy Hochul, who could sign or veto the legislation.