New York Crypto Mining Banned
New York State has made a landmark regulatory move under Governor Kathy Hochul. It has become the first American state to ban the mining of specific crypto tokens. These include cryptocurrencies that require extensive energy to be mined.
The Governor has taken the step to confront the environmental problems caused by energy consumption.
New York crypto mining ban
On Tuesday, Gov. Hochul signed the legislation to enforce a temporary prohibition on energy-intensive crypto mining. Essentially, the cryptocurrencies included in this category are the ones that run on the Proof of Work (PoW) mechanism.
The suspension of such activities is imposed for two years in NY. In this period, regulators will neither provide new permits nor renew any existing licenses. The ban is imposed under Assembly Bill A7389C.
The rationale behind this legislation is the high infrastructure and environmental costs of cryptocurrency mining. The bill also directed the NY State Department of Environmental Conservation to assess the impact of PoW on the environment.
The department will prepare a report in a year to assess its impact across the state. It will then provide recommendations to improve future policies.
What will be the repercussions of the ban?
Various American states recently introduced policies to support the digital asset industry. After China's crackdown on virtual asset service providers, they saw it as an opportunity to attract them to the US. However, this bill has done quite the opposite and may affect the mining operations in the country.
The timing of this ban is also critical in terms of the market condition. The crypto market is currently going through a rough winter. First, the Terra Luna collapse and then the decline of the FTX exchange have left the investors in shock.
Overall, there is extreme fear among traders who doubt the future of cryptocurrencies. In this scenario, a temporary ban on mining will further aggravate the situation for these digital assets.
Author: Wasay Ali
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