What impact does New York’s new bill have on crypto?

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The New York State Assembly has officially passed legislation that will restrict economic freedom and innovation throughout the state at a time when job creation and economic development are critical to the state’s economy.

The business community has strongly opposed the bill, arguing that the new legislature will make it harder for businesses to compete and create jobs in the current climate. In addition to the $15 USD minimum wage, the bill is set to mandate 12 weeks of paid family leave, which would be among the most generous in the country. It would also establish a new office of employee protections, which would be tasked with enforcing the state’s new labour laws.

How New York’s new mandate will impact crypto

The new bill will prohibit the approval of new applications or permits for digital asset mining activities, commonly known as proof-of-work mining, that uses electric power supplied by carbon-based fuels like coal.

Proof-of-Work authentication validates Bitcoin blockchain transactions, and it, like all industrial activity, consumes high amounts of energy. In 2019, the state passed the Climate Leadership and Community Protection Act, which requires the state to cut statewide greenhouse gas emissions by 85% by 2050 and to achieve net-zero emissions in all sectors of the economy by that time.  New York’s plan to meet these targets requires a significant increase in renewable energy generation, and a large portion of that will come from offshore wind farms. 

Proof-of-Work was expected to consume 247 terawatts of electricity in 2020, accounting for around 0.16% of world energy usage. Eliminating Proof-of-Work mining would not affect carbon emissions and would impede the country’s move to greater renewable energy generation and use. 

A greener way to mine Bitcoin

Switching to greener energy sources necessitates major investments in innovative energy technologies from companies willing to collaborate with legislators and the energy industry. Proof-of-Work miners act as dependable base customers, supplying steady demand – and money – for utilities while they build up renewable energy infrastructure.

An advantage of this is that they can rapidly power down to repurpose essential electricity elsewhere, something other high-demand businesses simply cannot accomplish.

Cleaner energy Proof-of-Work in action

For instance, when consumer demand increases in Manhattan at the height of summer or in Buffalo during the wintertime, digital asset miners can collaborate with utilities to reduce demand. The electricity used by Proof-of-Work miners is returned to the grid, providing retail users with additional capacity in minutes with no negative consequences. No other industry that requires comparable amounts of energy, including data centres, cloud service providers, and industrial facilities, can accomplish this.

In addition to collaborating with utilities, digital asset miners can also help to provide ancillary services to the grid. These services are traditionally provided by natural gas and diesel generators, which are not as nimble or as clean as digital asset mining operations. By providing these services, miners can further reduce stress on the grid and support the integration of renewable energy sources.

Crypto mining as part of the digital assets industry

Digital asset mining is a critical part of the digital infrastructure that enables blockchain technology and cryptocurrencies. The industry has a responsibility to work with utilities and other stakeholders to ensure that it can continue to grow in a sustainable way.

It’s also worth noting that, even though digital asset mining has grown in popularity in recent years, the Bitcoin Mining Council believes that the worldwide mining industry’s sustainable electricity mix is nearly 60%  – and increasing at that. The percentage of Chamber of Digital Commerce Mining Initiative members with infrastructure in New York is expected to be considerably higher, closer to 80%. Few businesses can claim to be THIS ecologically friendly.

Energy partners and crypto mining

The sustainability in the scene will grow as digital asset miners form partnerships with energy providers, utilities, communities, and other groups. These partnerships will develop new power capacity in New York by presenting unique and exciting monetary benefits for energy companies to build green infrastructure and power sources. Evolving Proof-of-Work operations will increasingly shift to more efficient methods of powering operations, while paying dividends to local communities in the form of jobs, particularly union jobs with organisations such as the International Brotherhood of Electrical Workers (IBEW), and increased local and state tax revenue.

Crypto mining and sustainability across the United States

Many American states aim to support digital asset mining activities and are ready to recruit New York-based enterprises looking for a friendlier environment. Georgia and Illinois have suggested tax breaks to entice digital asset mining businesses to locate in their states.

Stakeholders in Texas have remarked that Proof-of-Work mining has helped to boost the economy, generate employment, support the growth of renewable energy sources such as solar and wind, and strengthen the state’s tax base.  Colorado is also open to the idea of digital asset mining, with some lawmakers even suggesting that the state create a “Blockchain Task Force” to explore the potential benefits and applications of the technology.

Despite the challenges, digital asset mining continues to attract interest from individuals and businesses looking to get involved in the emerging industry. While New York may not be the centre of the digital asset mining universe, it is clear that the state is open to the idea of supporting and regulating the activity. With the right policies in place, New York could become a leader in this rapidly growing industry.

With this bill, New York can lose its position as a global financial services leader and rather be known for stifling a business-critical to its future. The digital asset mining sector and New York may set the benchmark for developing sustainable, ethical corporate growth if they work together.

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