New York Approves Bill on Mining Moratorium Citing Environmental Concerns

In light of heavy criticism on use of fossil fuel that has sparked debates in the crypto space, the latest development involves a piece of bill that prevents granting of permits to mining operations on environmental grounds.

By
Chung Yee
on
June 11, 2021
Category:
Blockchain News

No to Fossil Fuel

New York Senate Bill S6486B was passed in the upper house by a 36-27 margin on June 8th. The Empire State senate legislation may potentially impose a moratorium on proof of work authentication if it impacts the environment. The bill could inhibit the production, mining, and use of bitcoin in the state with the largest economy on the East Coast.

The recent environmental debate within crypto which has been passed around broadcasted interviews, printed media and social media is now a real political debate. The bill currently awaits review in New York’s lower chamber, the Assembly, and later will require the Governor’s signature if it is to be passed. 

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The bill is not a ban on mining activities. The bill will require that proof of work protocols for blockchains be further subjected to an environmental impact statement review. The bill has two main obligations: 

i. It applies to all proof of work protocols, but limited to only the Bitcoin blockchain; 

ii. There is no outright ban on mining activities, only targeted mining operations that impact the environment.  


Clean or Dirty Energy?

Elon Musk in his recent tweet famously caused the crypto market to tank. Citing concerns about the use of coal fuel in mining activities, Elon Musk reversed the decision to allow for Tesla to be purchased using Bitcoin. Many critics have lashed out at the billionaire because it is illogical to believe that the cheapest form of energy is based on carbon fuel.

In an article from Nasdaq.com in mid-May, it discusses the incentives of miners and how to curb the environmental impact of blockchain mining. Ultimately, the goal should be to encourage clean energy. But for example, only 7% of the USA’s energy source comes from hydropower. However, hydropower makes up 62% of the mining energy! The Nasdaq article cites a specific example concerning the increase of mining activities in China’s Sichuan province that coincides with the wet season. 

Half of the world’s crypto mining comes from the Sichuan province in China, but more specifically the rainy season. As the rains come, there becomes an abundance of energy generated through hydroelectric sources. This lowers production cost and  incentivises the miners to source for renewable energy and makes the transition from ‘dirty’ energy to ‘clean’ energy at a quicker rate.  

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When the University of Cambridge conducted its 3rd Global Cryptoasset Benchmarking Study, they found that miners are driven monetarily. Naturally, miners would choose the cheapest form of energy for their mining operation. The study also found that only 13% are ideologically driven. The miners are purists who will follow the money. 

Renewable energy is usually not capable of being stored. Once harvested or generated it must be used. Rather than allowing these excesses to go to waste, the constant energy to propel proof of work protocols makes this proper combination. The more the world becomes reliant on blockchain, the more it can continue to grow its use of environmentally friendly energy.

Recycling an Old Argument

Senator Elizabeth Warren took to social media and also felt the need to voice her opposition towards Bitcoin. The arguments took a similarly misguided vein as Musk.

To debunk the narrative build by Senator Warren and the rest, Ark Investment Management prepared a great chart:

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The entire argument derails when compared to other industries. The repertoire of criticism has been recycled regardless of the data that has been produced to debunk that argument. The only conclusion that can be drawn is, the critic is not concerned with the answer. He/she has a narrative to perpetuate for reasons known only to the critic. 

Source 

The Senate Bill is a Step in the Right Direction

The Bill S6486B does not outright ban mining operations. If indeed the environmental impact is minimal, the operation can still proceed after submitting the environmental impact statement. Although the legislative effort is commendable the practical effect would not be felt. New York is an urban area and it would not make economical sense to have a mining operation where costs outweigh the benefits. 

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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