Two more state assemblymembers have signed on as cosponsors to a piece of legislation that would place a three-year moratorium on Bitcoin mining statewide.
A press release issued on Feb. 24 from the office of local Assembly member Anna Kelles, who is the sponsor of the bill (A7389B), announced that Assemblymembers Amy Paulin and Ken Zebrowski have added their names as cosponsors to the legislation. As a whole, the bill has over 40 cosponsors.
Specifically, the bill would implement a three-year moratorium on “consolidated operations that use proof-of-work authentication methods to validate blockchain transactions.” Specifically, the moratorium would put a hold on the cryptocurrency mining operations located on sites of former power plants that used any form of fossil fuels. (This is the latest version of the bill. The original draft called for a moratorium on cryptocurrency mining operations regardless of where they were located and what power source they used.)
The bill would also require the New York State Department of Environmental Conservation (NYSDEC) to conduct a full environmental impact assessment of the cryptocurrency mining industry in the state, particularly examining the industry’s effect on water and air quality as well as greenhouse gas emissions in accordance to The Climate Leadership and Community Protection Act.
“That information is what we need to evaluate and then potentially, if necessary, regulate up to and including, if necessary, a ban of cryptocurrency operation activity in the state if that is what’s necessary to ensure that the industry does not prevent us from reaching our climate goals,” Assemblywoman Kelles said.
Cryptocurrency mining factors into this bill because cryptocurrency itself is based on a “blockchain system.” Assemblywoman Kelles describes blockchain technology as “agnostic” in that it is used for several different purposes.
“You have a block of information. You can put anything in that block that you want,” Kelles said. “What is in that block is unique, meaning everything in that is unique to that block. Every block within a block chain, or block chain technology, is assigned a unique identifier. … You have sort of an equivalent of a VIN number, so in cryptocurrency it’s called a ‘hash.’ And that hash number is unique to that block.”
If the data in a block were to be sent to someone else or if the data changes, a new block is created with a new hash.
“The thing that is important is that embedded in that larger code is a small piece of the code that tells the ledger … what previous block it came from, and that’s what creates the blockchain,” Kelles said.
A key component of blockchain technology is that it does not have a centralized system of recording and transferring of information. Blocks are recorded and validated at the point of each individual processor.
“If you were doing a supply chain, it would be like instantaneous[ly] taking out all the middlemen,” Kelles said. “It’s this very, very, very rapid transfer of information that you can validate and record all of the blocks in a blockchain into the public ledger.”
Transactions at every block must be validated, which can be done in about 16 different ways, according to Kelles. Bitcoin and other types of cryptocurrency use “proof-of-work” validation technology, which is distinct in comparison to the other forms of validation due to its “competitive” nature.
With proof-of-work validation, blocks are assigned a unique hash as well as a complicated mathematical equation that cannot be solved with any kind of software.
“It is designed so that it is totally random, and the only way that you can solve that mathematical equation is by randomly crunching numbers,” Kelles said.
If one solves the equation faster than anyone else, one validates the transaction and is awarded cryptocurrency.
Since this validation process is competitive, the only way for one to have an edge over another is to have more computer processors than the rest.
“Wealthy people that have access to capital recognized that there is this mechanism within cryptocurrency – instead of buying and selling it on a digital exchange, you could prioritize just trying to win it instead,” Kelles said.
This led to the consolidation of computer processors and ultimately the formation of centers for “mining” cryptocurrency. The problem with creating the mining centers is that they produce a “massive turnover of electronic waste,” according to Kelles.
“Not only do you want to have the most computer processors, but you want to have the ones that are the highest tech – the fastest and the newest tech.” she said.
“The technology is advancing, on average, every year and a half. If you want to have the most cutting edge, fastest computer processors, you essentially need to replace your … processor system every year and a half on average.”
In addition, since the processors run 24/7, they not only require energy to run continuously, but also energy to run cooling technology. According to a 2021 study titled “Bitcoin’s growing e-waste problem” published in the journal “Resources, Conservation & Recycling,” a proof-of-work cryptocurrency system 30,700 metric tons of e-waste annually, which is similar to the amount of IT equipment waste that the Netherlands produces annually.
Though it is not definitive, the owners of the site of the former Cayuga Power Plant have not ruled out establishing a cryptocurrency mining facility on the property. Kelles foresees multiple negative impacts – environmentally and economically – if such an operation were to be built there. For instance, if the owners were to keep the existing infrastructure of the power plant, the facility would continue to pull water from Cayuga Lake as a coolant system.
“They certainly could design a new building … I am skeptical of why they would build an entire new facility and not take advantage of existing infrastructure,” Kelles said. “But that could – if they were to build a new facility – that could also pull water in from the lake as a coolant system.”
This would also cause an increase in the temperature of the lake’s water, which, according to Kelles, is one of the leading risk factors for the increased presence of Harmful Algal Blooms. Kelles said an elevation in the number of Harmful Algal Blooms would also impact the agritourism industry in the region.
“One of the top industries in the Finger Lakes, including around Cayuga Lake, is the agritourism industry, which is a $3 billion dollar industry in the Finger Lakes, and it employs … up to somewhere between 60,000 and 70,000 people,” she said. “The potential impact on our economy is real.”
