The future of cryptocurrency in New York lies in Gov. Kathy Hochul’s hands after lawmakers passed two seemingly contradictory bills on Friday, June 3, 2022. This week we’ve teamed up with locally grown Foundry Digital to tackle this pressing topic and the potential impact on WNY.
The first bill, A.7389C/ S. 6486D (Kelles/Parker) would impose a 2-year ban on cryptocurrency mining operations that use proof-of-work authentication methods to validate transactions and, more importantly, to secure the online investments of the 46 million Americans who use the network. The second bill, A.9275/S.8343 (Vanel/Sanders) establishes the New York State cryptocurrency and blockchain task force to study how New Yorkers can harness the growth of the industry for the advancement of New York, including its environmental, social, and economic implications.
The Kelles/Parker bill that seeks a 24-month moratorium comes as a result of the localized controversy surrounding the Greenidge Generation Bitcoin mining facility, a natural gas plant near Seneca Lake in Dresden, New York that employs around 50 Upstate New Yorkers and operates below its permit allowance yet still draws the ire of some environmentalists. In April, a New York Supreme Court judge threw out activists’ lawsuit against the plant for the fifth time, citing a lack of evidence and the failure to submit any proof of injury by environmental advocates.
There is fear downstate of more facilities following suit, although the moratorium bill grandfathers in the Greenidge facility, thus contradicting its original goal.
Contrary to claims, many within the industry strongly support the environmental goals New York State is advancing, including transitioning to a greener economy. Although the State has set out a deliberate process to ensure that these green changes can occur without adversely affecting the economy and population, this bill skips the deliberation and implements a blunt suspension on a specific sector without much research to back it up.
According to Block, Inc. which comprises Square, Cash App, Afterpay, Spiral, TIDAL, and TBD, “There’s a misconception that as bitcoin transactions scale, so will its energy consumption. In reality, bitcoin’s transaction volume can be independent of energy usage, meaning that it can accommodate 100, 1,000, or 10,000 times more transactions for the same amount of energy. For example, Cash App users can send bitcoin back and forth to each other thousands of times and there is no impact on bitcoin mining energy consumption.”
Many fear that if the two-year digital mining ban bill is enacted the resulting effect would be detrimental to local businesses, future entrepreneurs’ career opportunities, and specific communities’ ability to save and store wealth. For example, the Harlem Bitcoin Community has hundreds of members from many different backgrounds, most of whom live in New York City. They state,
As a response, Technology Industry leaders are calling this week for the advancement of the second passed bill A.9275/S.8343 that would establish the New York State cryptocurrency and blockchain task force. The bill was sponsored by Assemblyman Clyde Vanel and co-sponsored by WNY representative Assemblymember Crystal Peoples-Stokes and directly echoes the policies of the Biden Administration, California, and Washington State in seeking to study the promising cryptocurrency sector to determine its benefits and impacts.
If signed into law by Gov. Hochul, the task force would consist of sixteen members, with a mix of core state regulators, academics, environmentalists, and industry participants. Importantly, the task force must submit to the governor, by December 15, 2024, a report on various topics regarding the digital assets industry, including jobs, tax revenue, transparency, and energy usage. Assemblyman Clyde Vanel states,
As we pursue a greener economy, we must also promote new technologies and industries that advance our State forward. The best way to accomplish both goals is to first engage in a holistic review of the issues and set policy when the facts are known and established.
While regulators and communities have raised valid concerns about Bitcoin’s electricity consumption, the mining industry is a significant contributor of jobs—including in economically underserved areas and actually consumes less energy than many comparable industries.
Market participants, service providers, and industry working groups are actively working to make the industry greener and more transparent. In addition to the State’s already highly onerous and regressive set of regulations (the “Bit License”).
Although it’s widely acknowledged that there are concerns surrounding the Crypto industry, the world is not backing away from trying to understand this emerging technology. In addition, if passed, the impact of bill A.7389C/S. 6486D could be far-reaching and set a dangerous legal precedent of banning new industries in New York without proper research and investigation.
If you are interested in seeing the New York State cryptocurrency and blockchain study task force (A.9275/S.8343) have the opportunity to study the impacts of the industry, including environmental and economic impacts, you can click here to e-mail or call Gov. Hochul’s office.
Contact By Phone:
1-518-474-8390 | Office hours: 9:00am to 5:00pm
Contact By Mail:
The Honorable Kathy Hochul
Governor of New York State
NYS State Capitol Building
Albany, NY 12224
About Foundry Digital:
Foundry was created to meet the institutional demand for better capital access, efficiency, and transparency in the digital currency mining and staking industry. As a Digital Currency Group company, Foundry taps unparalleled institutional expertise, capital, and market intelligence to provide North American bitcoin miners and global manufacturers with the resources to build, maintain, and secure decentralized networks. Foundry empowers miners with the tools they need to build tomorrow’s decentralized infrastructure. We are protocol-agnostic and seek to support like-minded blockchain entrepreneurs who share our mission to advance the industry.
Lead Image: June 10, 2022 – Albany, NY – Governor Kathy Hochul speaks during a media availability in the Red Room at the State Capitol in Albany. (Mike Groll/Office of Governor Kathy Hochul)