To address the growing concerns about the environmental impact of cryptocurrency mining, New York Lawmakers have passed a bill that outrightly banishes some types of cryptocurrency mining like Bitcoin that rely on carbon-based fuel.
Bitcoin and Ethereum in Danger?
The New York State Senate has voted 36-27 in favor of a bill passed earlier this year (April) by their Assembly counterparts, sending it on to Governor Kathy Hochul.
The new legislation will make it harder for individuals and businesses to mine cryptocurrencies using high-energy consuming “proof of work” methods.
The main targets include popular digital currencies like Bitcoin, which uses an intensive process called “mining” with colossal electricity consumption to verify transactions on its network.
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The new legislation will place a two-year ban on issued permits or current ones renewed to conduct proof of work authenticated cryptocurrency mining that relies solely on electricity generated from carbon-based fuels.
During these two years, the state will be executing a study to examine the environmental impact and potential social costs/ benefits from proof-of-work mining operations.
Can Ethereum Save Itself?
The popular cryptocurrency, Ethereum, plans to switch over its “proof-of-work” authentication method to a more energy-efficient one called ‘proof-of-stake’ by the end of this year.
Cryptocurrencies have struggled with environmental groups’ concerns and potential regulatory action due to their high energy use. Last year as China faced an electricity crisis; the same trend continued; they banned all forms of cryptocurrency transactions which sent many operators moving out towards Kazakhstan or America, where fossil fuel-generated power can be used in mining processes instead of hydroelectric power. This switchover caused even more harm defeating its original purpose: helping protect our planet’s natural resources.
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In the United States, Upstate New York has emerged as a popular destination for miners due to its abundant cheap electric power and unused coal-powered plants. The region can be repurposed into massive mining farms. Local residents have opposed crypto mining operations for fear that it will damage their environment.
With many cryptocurrencies dropping proof-of-work, Bitcoin has been left as the only primary cryptocurrency that still uses this method. However, there are many people who think it should be abandoned in favor of something more efficient. But Bitcoin supporters argue that proof-of-work remains the most secure method of authenticating transactions and allows their cryptocurrency to remain decentralized.