The law, which was signed on Tuesday by New York Governor Kathy Hochul, outlaws some bitcoin mining companies that use carbon-based energy sources. A proof-of-work mining firm will not be permitted to expand, renew permits, or allow new competitors to start operations for the next two years unless it employs only renewable energy.
Hochul stated in a court document outlining her choice that it is the first of its sort in the nation.
The governor went on to say that it was an important move for New York in its efforts to reduce its carbon footprint by cracking down on mining that uses electricity generated by fossil fuel-burning power plants. The regulation was also passed when the cryptocurrency sector was still reeling from the collapse of Sam Bankman-FTX, Fried's which was previously among the most well-known and reputable brands in the sector.
The mining law in New York, which was approved by the state senate and state assembly in June and late April, imposes a two-year ban on specific cryptocurrency mining operations that employ proof-of-work authentication techniques to verify blockchain transactions. Bitcoin and other tokens are created by proof-of-work mining, which necessitates expensive equipment and lots of electricity.
Industry experts warn CNBC that it could have a cascading effect throughout the United States, which is now leading the globe in bitcoin mining with 38% of all miners.
The Chamber of Digital Commerce issued a statement saying that the approval will create a hazardous precedent in determining who may or may not use power in New York State.
Perianne Boring of the Chamber of Digital Commerce asserts that this would ultimately undermine New York's economy by pushing companies to relocate their workforces. This is a serious loss for the state and will hamper its future as a pioneer in financial services and technology. More importantly, this choice will destroy vital union jobs and further deny the many underbanked New Yorkers access to financial services, as said by Boring to CNBC.