New York’s Push to Ban Crypto Mining Triggers Market Response

Proof-of-Work

Cryptocurrency mining tends to be an exceptionally carbon-intensive endeavor, earning it the criticism of environmental preservationists, lobbyists and government officials. At the beginning of June 2022, government officials in the state of New York passed a bill banning several methods of cryptocurrency mining.

What We Know About the Bill

The bill was voted on by the New York State Senate. Members voted to ban cryptocurrency mining 36-27. The next step will be for New York State Governor Kathy Hochul.

The bill specifically calls to ban the mining of cryptocurrency that uses a Proof-of-Work (PoW) authentication system. PoW is currently utilized by several of the most valuable cryptocurrencies on the market. The PoW authentication process relies on carrying out complex calculations to verify each token mined on the blockchain as authentic.

However, there are some crypto assets that have already moved beyond PoW, such as Cardano. Cardano instead uses a Proof-of-Stake (PoS) system, and Ethereum is already moving toward adopting PoS before the end of 2023.

What If the Bill Goes Through?

If Governor Hochul signs off on the bill, a two-year ban would be placed on permits being issued to conduct proof-of-work cryptocurrency mining. During the next two years, the state government of New York will assess the environmental damage done by cryptocurrency mining, as well as the socio-economic cost and gain.

Is Meaningful Change Possible?

Bitcoin has been the juggernaut of the cryptocurrency market for years now, far out-pacing anything else currently available on the market, in terms of value and market share. That said, Bitcoin uses a Proof-of-Work authentication system. The New York ban may push down the demand for Bitcoin, and we might even see a rise in demand for Cardano, and later Ethereum by 2023.

The more likely scenario is that any outcome of this bill will be miniscule on a global scale. If the cryptocurrency market is to become more environmentally friendly, it falls on Bitcoin’s shoulders to move toward a Proof-of-Stake system.

Sources:

https://www.nytimes.com/2022/06/07/nyregion/cryptomining-ban-ny.html

https://www.cnbc.com/2022/06/04/new-york-crypto-mining-bill-senator-anna-kelles-interview.html

https://time.com/6183929/new-york-crypto-mining-moratorium/

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