Not a day goes by without another news story covering the debate surrounding cryptocurrency mining and its impact on electricity usage. Some people claim that cryptocurrency mining is energy-intensive and wasteful. In contrast, others argue that it needs to be seen in the context of the benefits that it brings to the wider economy.
There have been many attempts to ban cryptocurrency mining in New York during the past year. However, none of them has been successful. Massena and Plattsburgh passed bans on mining Bitcoin in 2018, but those were overturned after a year. Now, some state lawmakers want to ban some types of Bitcoin mining altogether. However, these attempts are misguided.
Mining is a Growing Trend in New York
Upstate New York is becoming the new home of crypto mining operations. These companies generate huge amounts of energy by performing computer work for a small fee and are crucial to the cryptocurrency network. In addition to cheap electricity, New York also has abundant hydropower, which makes cryptocurrency mining an excellent business opportunity. However, while some towns are eager to welcome cryptocurrency mining, others are wary. Let’s look at some of the concerns.
First of all, crypto mining does not support climate goals. The state has a target of reducing its carbon emissions by 40 percent by 2030, but crypto mining is threatening that goal. One example of a dirty energy source is the Greenidge plant, which produces dirty energy for bitcoin mining and private use, and thus can skirt many of the CLCPA requirements. Second, cryptocurrency mining in New York is not good for the environment because it drives up energy bills for everyday New Yorkers and depletes renewable sources.
Environmental Impacts of Crypto Mining
While proponents of crypto mining in New York have argued against the Kelles/Parker bill, they do not oppose the study of the energy and social impact of the industry. In fact, Assembly Member Clyde Vanel sponsored a bill to create a task force to study the effects of cryptocurrency mining on New York. The measure passed the Assembly and is currently pending in the state Senate. If passed, the task force would study the energy and social impact of crypto mining and potential policy considerations.
However, the bill also poses a risk to the crypto industry in New York. The bill would halt the industry’s growth in the state and cause severe problems for the state’s local communities. Moreover, it would be counterproductive to the state’s climate action goals, which call for an 85% reduction in statewide greenhouse gas emissions by 2050 and net zero-emission in all sectors of the economy by the same date. As such, crypto mining could contribute to the transition to a renewable energy-based economy in the state and potentially accelerate the transition to it.
One such facility, the Greenidge Generating Station, operates around the clock. It produces enough electricity to run nearly 20,000 computers. Last year, the center generated 1,866 bitcoins and projected a $100 million profit. As the cryptocurrency industry grows, the power plant plans to double its computing power and raise its production close to its capacity. The facility was once a coal-fired power plant but was shut down in 2011. However, its revival puts the area at risk of a high environmental and social cost.
Bitcoin’s electricity consumption is about 500TWh a year
According to a recent report, the electricity bitcoin uses is equivalent to the consumption of about five hundred million tons of oil. According to the study, Bitcoin consumes about 110 Terrawatt-hours of electricity each day. That amount represents more than a third of all the energy consumed by the entire country of Argentina.
According to another report published in the journal Energy Policy, bitcoin consumes less energy than 28 countries combined. This doesn’t include the electricity used by the adjacent blockchain ecosystems, like Ethereum. The global Bitcoin economy uses approximately 500TWh of power per year, comparable to other industrialized financial systems. The study notes that the cryptocurrency ecosystem’s amount of energy is still controversial. This is as all studies are based on estimates and are, therefore, subject to some degree of uncertainty.
“Proof-of-Work cryptocurrency mining poses a massive threat to our fossil fuels”
In the United States, proof-of-work cryptocurrency mining, also known as Bitcoin mining, poses a major threat to our environment. In New York, there has been an invasion of upstate communities by speculators. This brings little economic benefit while hampering the state’s progress in moving away from fossil fuels. Gov. Kathy Hochul should declare a moratorium on proof-of-work cryptocurrency mining in New York to combat this problem.
To make matters worse, New York recently passed a law requiring that the greenhouse gas emissions from New York-based power plants include emissions from natural gas produced out of state. This is a particularly big issue in New York. This is because almost all of the natural gas used at Greenidge comes from the Marcellus Shale formation in Pennsylvania. However, the state Department of Environmental Conservation (DEC) opposed this law. They say the company would use the power plant for mining Bitcoin, which would further threaten its local community’s environment.
How Government Regulation Will Affect the Crypto Community
If you live in New York, you’ve likely heard about a battle that is going on in Albany over a proposed piece of legislation. Assembly Bill 6239 would effectively ban mining operations for cryptocurrencies like Bitcoin, Ethereum, and Zcash. Many call it an attack on these burgeoning technologies, and they have reason to worry. All around the world, governments are trying to figure out how to respond to cryptocurrency mining, including its legality and its environmental impact. But when it comes down to it, many regulations aren’t even out of deliberate intentions. They just come from government agencies that don’t know what they’re doing or talking about.
These bills are often more about making headlines than actually solving problems. And if history is any indication, there will be a massive backlash against such actions. So why does government regulation matter? It matters because it could affect your bottom line. The crypto community has already been hit with bans in China and South Korea. These are two countries where digital currencies were once-thriving industries. The U.S., however, has yet to make any moves toward full-on prohibition or regulation of cryptocurrency mining. However, we’re getting closer every day…