The governor of New York, Kathy Hochul, has approved one of the country’s most stringent rules governing crypto mining.
The bill imposes a two-year freeze on the issuance of new licenses to crypto mining businesses that rely on fossil fuels for power and validate transaction data using proof-of-work authentication techniques using millions of computers. As a result, the businesses receive compensation from the blockchain network in the form of tokens.
The proof-of-work authentication method is used by the Bitcoin network. Bitcoin mining facilities cost billions of dollars to run, and they can use as much energy as an entire country does.
Since China outlawed cryptocurrency mining in May of last year, New York has emerged as one of the largest centers for mining. Because of the state’s cheap energy costs and temperate environment, mining activities there are more productive. However, environmental activists have become more aware of the costs associated with such actions.
“I will ensure that New York continues to be the center of financial innovation, while also taking important steps to prioritize the protection of the environment,” Hochul said in a statement late Tuesday.
The bill’s adoption coincides with increased regulatory scrutiny of the cryptocurrency sector as a result of the collapse of the cryptocurrency exchange FTX. The abrupt decline of FTX has shocked the cryptocurrency market and raised concerns about contagion, causing Bitcoin to briefly drop below $16,000.
The state Senate passed the crypto mining legislation in June, but Hochul didn’t sign it until recently due to ferocious opposition from the bitcoin sector. Hochul stated she is “examining that measure attentively” when asked about the crypto moratorium during a debate for governor in late October, but she did not expressly indicate she would sign it.
