New Yorks Proposed Moratorium on Cryptocurrency Mining Operations | Insights | Greenberg Traurig LLP

On June 2, 2022, the new york senate passed senate bill s6486d (the bill), which would amend the state’s environmental conservation law and place a two-year moratorium on certain mining operations. cryptocurrency mining in new york state. The bill passed the New York Assembly in early 2022 and now awaits the government. the signature of kathy hochul. If signed, the bill would prohibit the issuance of permits for certain electrical generation facilities that provide power for mining operations that use proof-of-work (POW) authentication methods to validate blockchain transactions. The legislation would also require a comprehensive generic review of the environmental impact statement by the new york department of environmental conservation in consultation with the state department of public service.

what is bitcoin mining and pow authentication?

Bitcoin mining is an essential verification process for the bitcoin economy; is the process of creating new bitcoins by solving complex mathematical problems that verify transactions in the cryptocurrency. pow mining is one of the two most common mechanisms used by cryptocurrency miners to verify new transactions on the blockchain and create new tokens. Powerful computers connect to the bitcoin network and solve complex mathematical equations to confirm the legitimacy of bitcoin transactions. As payment for these calculations, miners receive new bitcoins as a financial incentive to keep the systems running. By applying pow techniques, miners ensure the security of the blockchain by validating the accuracy of transactions, as there is no central authority to protect transaction information.

Reading: New york on bitcoin mining

key points of the bill

The bill would partially limit pow mining operations in new york for two years. Key points of the bill include:

  • a two-year moratorium on approvals of any new or renewed permits for plants that burn fossil fuels used to power behind-the-meter mining for energy, targeting new operations only.
  • A ban on the issuance of new air permits and the renewal of existing air permits, but would not affect current operating pow mining operations whose air permits do not require review within the moratorium period.
  • a study of existing cryptocurrency mining operations and their possible environmental impact in the state by the department of environmental conservation in conjunction with the department of public service.
  • the bill would not apply to mining operations that use energy from the grid or use renewable energy.

See also: Bitcoin Tech Summit | Business Resource Center | Utah Valley University

the future of the bill and its impact

To date, Govt. Hochul has not acted on the bill and has indicated that a decision may not be made in the coming weeks. Blockchain industry leaders have raised concerns related to the potential economic impacts of the bill in New York State. If the governor signs the bill, New York would be the first state in the country to ban certain blockchain technology infrastructure.

treatment of cryptocurrency mining in other states

If it becomes law, the bill may have unintended consequences for industry in New York, as innovators and entrepreneurs may focus on other states that have unregulated power grids and financial incentives. For example, some states are taking steps to incentivize cryptocurrency mining by:

  1. in may 2021, kentucky passed a pair of bills creating tax incentives for crypto mining companies;[1]
  2. in january 2022, legislation was proposed in illinois to modify a state law to extend incentives for crypto mining companies that set up in the state;[2]
  3. in June 2021, the texas government. abbott signed a bill[3] that brings virtual currency under the texas business law framework as a secure transaction, making business transactions easier for cryptocurrency businesses in texas; and
  4. georgia has also become an attractive state for crypto miners because it offers lower energy prices and large amounts of nuclear and solar power.[4]

[1] kentucky state house of representatives “bill 230” May 25, 2021, available at: h.r. 230, 21 reg. session (ky. 2021); Kentucky State Senate “Senate Bill 255” May 25, 2021, Available at: s. 255, Reg. 21st session (ky. 2021).

See also: Google Just Gave Its Nod of Approval to Blockchain and Crypto Technology | The Motley Fool

[2] illinois house of representatives “bill 5287” of may 25, 2022, available at: h.r. 5287, 102nd generation. ass. (ill. 2022).

[3] the texas house of representatives “bill 4474” of June 15, 2021, available at: h.r. 4474, Reg. session (tex. 2022).

[4] josh saul, “american bitcoin miners see georgia as the new us country. uu. hot spot”, american edition of bloomberg (February 7, 2022).

* special thanks to summer associate blanca alcaraz for her valuable contribution to this gt alert. not a licensed attorney.

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