Crypto industry ponders what's next after NY moratorium
Gov. Kathy Hochul wants the crypto-based industry to thrive in New York, but she said Monday it can't come at the expense of the environment.
"I said I support the crypto industry," Hochul said Monday. "That doesn't mean they have to use our limited resources here in upstate New York to do the mining."
The crypto industry in New York is trying to chart a way forward after Hochul approved a two-year moratorium on a key process used in the industry.
In approving the moratorium, she sided with skeptics who worry that the digital currency validation process known as "proof-of-work" is safe for the environment.
Last week, Hochul approved the long-sought two-year moratorium on the proof-of-work cryptomining process after a long push by advocates in the Finger Lakes region and New York City.
It is not a physical mining process, but a digital operation intended to benefit the growing crypto industry, which has come under scrutiny amid a series of high-profile problems such as the bankruptcy of exchange FTX.
"Any people involved in crypto in New York state have really received a seal of approval, so we're not seeing the collapse that we've had in other areas," Hochul said.
Industry officials like Perianne Boring, the CEO of the Digital Chamber of Commerce, believe the governor is trying to have it both ways.
"It's like saying you're welcome to internet technology, but you're not welcome to computers," she said. "You can't really have cryptocurrency activity without the infrastructure that runs it."
The crypto industry has already been reluctant to expand its operations in New York given its appetite for regulations. Boring pointed to other states with a much lighter regulatory hand where relocation would not be difficult.
"It's not a business-friendly landscape for bitcoin miners," Boring said. "That's really I think the nail in the coffin."
The industry has been on something of a rollercoaster in recent weeks following the collapse of the stock exchange FTX, the initiation of investigations and deeper scrutiny of the firm's practices. Lender BlockFi, which is financially tied to FTX, filed for bankruptcy on Monday.
Nevertheless, industry officials plan to continue to have a presence in Albany and make their case to lawmakers and regulators.
"They are an example of a centralized institution that has failed, which is why we need blockchain technology," Boring said of FTX and the subsequent fallout.
Environmental groups and advocates have targeted the proof-of-work process in cryptomining for the tremendous amount of energy it requires — burning fossil fuels in the process to power massive computer servers.
"There are ways to create cryptocurrencies that don't have the same environmental energy concerns," said Liz Moran, the New York police attorney for the group Earthjustice. "So New York can have a cryptocurrency without harming our planet and the environment."
Advocates and some business owners in the Finger Lakes region have called for the moratorium, as a cryptomining operation on Seneca Lake raises concerns.
New York will also undertake a review of the effects of proof-of-work cryptomining on the environment, a process that will unfold as New York already seeks to significantly reduce its carbon consumption.
"We need to make sure there are policies in place so they don't consume as much energy — if it can be done," Moran said. "So that will be for the state of New York to evaluate now."
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