New York’s lower house wants to curb environmentally harmful crypto mine operations

There are no new emission permits for mining particularly energy-intensive cryptocurrencies in the US state of New York, initially for two years. The state House of Representatives decided Tuesday with a vote of 91 to 56. A similar bill is pending in the House of Lords, but time is running out. Only cryptocurrencies that rely on “Proof of Work” will be affected, which requires a lot of energy and leads to centralization in the cryptocurrencies, which are actually meant to be decentralized. The most prominent example is Bitcoin.

At its core, Proof of Work is a race: the goal is to be the first to solve increasingly difficult arithmetic tasks. The calculations themselves are largely meaningless; they only serve to prove that you have made a lot of calculations, faster than anyone else. Due to economies of scale, small computer systems cannot keep up economically in the long run, which means that the blockchain in the respective cryptocurrency is determined by a declining number of participants.

The energy consumption for Proof of Work is so great that power plants that have already been shut down are put back into operation. In New York, a power plant in the city of Dresden on Lake Seneca arouses dissatisfaction: Investors bought the decommissioned coal-fired power plant, converted it to gas operation and put it back into operation to extract Bitcoin. When demand is high, the power plant also sends electricity to the grid.

Where previously the power plant only ran six percent of the time, when the demand for electricity was particularly high, it now runs, thanks to bitcoin mining, around the clock. The result is not only more greenhouse gases, but also noise, which scares tourists away. In addition, water from a lake is used to cool and return heaters, which is said to have driven fish away. The operators want to extract even more Bitcoin and have applied for permission to increase greenhouse gas emissions significantly.

That is exactly what the Democratic MP Dr. Prevent Anna Kelle’s bill: If thermal power plants are used for proof-of-work prospecting, they should not receive new permits for greenhouse gas emissions. Existing permits remained valid until their expiration date.

Power plants that do not emit greenhouse gases, such as hydropower, wind and solar power plants, would not be affected. They should supply unlimited electricity for cryptocurrency operations. Caloric power plants are likely to supply electricity to cryptocurrencies that rely on more efficient processes. An example would be Ethereum once it has implemented the announced switch to Proof of Stake. Ownership and trading of cryptocurrencies will under no circumstances be restricted.

According to Kelles, New York currently accounts for 20 percent of all mining capacity in the United States. The two-year moratorium will be used to develop a long-term strategy that is consistent with New York’s statutory greenhouse gas emission reduction targets. The Department of Environmental Protection must prepare a report within 120 days of the enactment of the law, which describes all existing proof-of-work exploration rigs in New York State, their power consumption, power sources, associated greenhouse gas emissions, other pollution, water consumption, environmental impacts and human health and the expected increase in energy consumption.

Republicans and a small group of Democrats voted against the bill. Republicans describe the moratorium as “anti-technology” and fear of jobs. Kelles claims that far more jobs are lost in tourism and agriculture due to the pollution of prospecting after work than are achieved in exploration, power plants and coal and gas extraction. Her party also has a two-thirds majority in the upper house, although the election period ends on June 2. Until then, both houses were to agree on a uniform version of the law.


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