• New York becomes the first state to enact a two-year ban to curb crypto mining.
• As the financial center of the U.S., New York has arguably the most comprehensive and granular crypto regulations in the nation.

New York became the largest crypto mining hub after China banned cryptocurrency mining in June last year. Recently, legislation was signed by Governor Kathy Hochul on Tuesday to enact a two-year ban on cryptocurrency mining.

The NY legislation has imposed it on mining companies that are seeking new permits to retrofit some of the oldest and dirtiest fossil fuel plants in the state into digital mining operations. This will require New York to study the industry’s impact on the state’s efforts to reduce its greenhouse gas emissions.

New York seems to be more concerned about the environmental effects that crypto mining has, but it is also a move to prevent the impact of any crypto debacle like that of FTX on its financial system.

The New  York government has long been dubious about the mining ban, so this is not entirely surprising. Lawmakers in New York passed a bill in June this year to ban certain bitcoin mining operations that run on carbon-based power sources.

I will ensure that New York continues to be the center of financial innovation, while also taking important steps to prioritize the protection of our environment,

Hochul, a Democrat, said in a message explaining her approval.

The crypto community has expressed its disagreement severally about getting rid of Proof of Work. The head of policy at Blockchain seconded crypto tweeter in a statement saying that the ban will not reduce carbon emissions. The mining ban will only push miners away from New York to build in other areas where the state has no influence over them says.

Does the New York Ban Hurt Cryptocurrencies?

China was once the epicenter of crypto mining, while New York fell second. China imposed its ban last year and this had several impacts on cryptocurrencies. The Bitcoin price nosedived after the ban was complete, and crypto miners migrated to other nations that were crypto-friendly, additionally getting rid of more than 10,000 mining computers leaving individuals jobless.

Ultimately I agree with this (that is, I oppose banning PoW). The government picking and choosing which specific applications are an okay use of electricity or not is a bad idea. Better to just implement carbon pricing, and use some of the revenues to compensate low-income users. https://t.co/NnBzmv5mYz

— vitalik.eth (@VitalikButerin) June 4, 2022

Proof-of-Work blockchains often see gas fees spike whenever there’s a bull market, meaning that it costs more for a transaction to be processed .

Because proof-of-work mining requires so much computing power, it tends to consolidate miners down to the few people who can afford the types of equipment. It also pulls computing resources into locations where electricity is cheap. Hence having a consolidation of miners and a geographic consolidation.

Amid the push to ban mining, New York Attorney General Letitia James warned New Yorkers against investing in crypto. In an investor alert, James stated that many are “losing billions” in cryptocurrencies and that even prominent projects could crash.