The bill imposes a two-year freeze on the issuance of new licenses to cryptocurrency 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, businesses receive rewards from the blockchain network in the form of tokens.
The proof-of-work authentication method is used by the Bitcoin network. Operating bitcoin mining operations can cost billions of dollars and consume as much energy as an entire nation.
Since China forbade cryptocurrency mining in May of last year, one of the biggest mining hubs has formed in New York. The state’s energy prices are low, and the climate is temperate, making mining operations there more productive. Environmentalists are now more conscious of the expenses related to such initiatives, though.
In addition to making significant efforts to promote environmental protection, she will make sure that New York remains a hub of financial innovation, Hochul said in a statement late Tuesday.
How Serial Meltdowns Are Upending the Foundations of Cryptocurrency: QuickTake
Adoption of the measure occurs at the same time that regulatory scrutiny of the cryptocurrency industry has grown as a result of the failure of the FTX cryptocurrency exchange. Bitcoin momentarily fell below $16,000 as a result of the rapid decrease of FTX, which alarmed the cryptocurrency market and sparked worries about contagion.
The state Senate passed the legislation in June, but Hochul didn’t sign it until recently due to ferocious opposition from the bitcoin sector. Hochul stated she is examining at 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.