New York bitcoin mining moratorium proceeding through state house

The state also has a chilly climate, which means less energy is needed to cool down the banks of computers used in crypto mining, as well as a lot of abandoned industrial infrastructure that’s ripe for repurposing. Crypto mining company Coinmint, for example, operates a facility in a former Alcoa aluminum smelter in Massena, which taps into the area’s abundant wind power, plus the cheap electricity produced from the dams that line the St. Lawrence River. The Massena site, at 435 megawatts of transformer capacity, is billed as one of the largest bitcoin mining facilities in the U.S.

But not all operations run on renewables. Companies like Greenidge Generation, which operates its bitcoin mining facility in a former coal plant retrofitted for natural gas, have drawn the ire of some lawmakers who now want to stamp out the state’s crypto mining industry.

The northern border town of Plattsburgh temporarily enacted its own local ban on cryptocurrency mining operations in 2018, and just last year, politicians tried to shut down parts of the mining industry statewide. That move failed after a union representing electrical workers came out in defense of the mining industry.

This latest effort, however, appears to have real teeth.

One section of the bill currently under consideration in Albany involves conducting a statewide study of the environmental impact of proof-of-work mining operations on New York’s ability to reach aggressive climate goals set under the Climate Leadership and Community Protection Act, which requires New York’s greenhouse gas emissions be cut by 85% by 2050. Boring tells CNBC the recent swell of support in favor of this year’s proposed ban has a whole lot to do with this mandate to transition to sustainable energy.

“There are many unions labor unions who are against this bill because it could have dire economic consequences,” said Boring. “Bitcoin mining operations are providing high-paying and high-grade, great jobs for local communities. One of our members, their average pay is $80,000 a year.”

As Boring points out, New York is a leader when it comes to state legislation, so there is also the potential for a copycat phenomenon rippling across the country.

“Other blue states often follow the lead of New York state and this would be giving them an easy template to replicate,” said Zhang, Foundry’s SVP of Mining Strategy.

“Sure, the network will be fine — it survived a nation-state attack from China last summer — but the implications for where the technology will scale and develop in the future are massive,” continued Zhang.

However, many others in the industry think concerns over the fallout of a mining moratorium in New York are overblown.

Veteran bitcoin miners like Core Scientific co-founder Darin Feinstein say the industry already knows New York is generally hostile to the crypto mining business.

“There’s no reason to go into a region that doesn’t want you,” said Feinstein. “Bitcoin miners are really a data center business, and the data center needs to locate in jurisdictions that want to have data centers within their borders…If you’re going to ignore that, then you have to deal with the consequences of conducting business in a region that doesn’t want your business.”

Feinstein and other miners point out that there are plenty of friendlier jurisdictions: Georgia, North Carolina, North Dakota, Texas and Wyoming have all become major mining destinations.

Texas has crypto-friendly lawmakers, a deregulated power grid with real-time spot pricing, and access to significant excess renewable energy, as well as stranded or flared natural gas. The state’s regulatory friendliness toward miners also makes the industry very predictable, according to Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners.

“It is a very attractive environment for miners to deploy large amounts of capital in,” he said. “The sheer number of land deals and power purchase agreements that are in various stages of negotiation is enormous.”

Texas Blockchain Council President Lee Bratcher tells CNBC that if New York does send the bill to the Governor’s desk, New York’s hashrate (an industry term used to describe the collective computing power of the bitcoin network) will just flow to other jurisdictions within the United States that understand the benefit to their constituents of the job creation, tax revenue, and renewable energy generation incentives that bitcoin miners bring.

Senator Cynthia Lummis, R-Wy., explains the appeal of mining to her state.

“In my state, we export a great deal of energy, both hydrocarbon energy and green energy. We should be using more of that energy in state to produce bitcoin,” said Lummis, who went on to describe the process of using other wasted natural gas to power bitcoin mining operations.

Feinstein tells CNBC that if New York wants to take a similar approach by banning the industry, “it’s a gift to every other state in America that wants to embrace the most important economic financial accounting technology that’s been invented by humans ever.”