Crypto Industry Considers What’s Next After New York Moratorium

Governor Kathy Hochul wants the crypto industry to thrive in New York, but she said Monday that 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.

With her endorsement of the moratorium, she is siding with skeptics who fear that the digital currency validation process known as “proof of work” is environmentally safe.

Hochul last week approved the long-sought two-year moratorium on the proof-of-work cryptomining process after prolonged pressure from 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 intense scrutiny amid a series of high-profile issues like the bankruptcy of the FTX exchange.

“Everyone involved in crypto in New York State has really gotten a stamp of approval, so we’re not seeing the meltdown that we’ve had in other areas,” Hochul said.

Industry officials like Perianne Boring, CEO of the Chamber of Digital Commerce, believe the governor is trying to have it both ways.

“It’s like saying you’re pro-internet technology, but you’re not pro-computers,” she said. “You can’t really have a cryptocurrency business without the infrastructure running it.”

The crypto industry was already hesitant to expand operations in New York given its appetite for regulation. 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. “It’s really, I think, the nail in the coffin.”

The industry has been on something of a roller coaster in recent weeks following the collapse of the FTX exchange, prompting investigations and closer scrutiny of the company’s practices. On Monday, lender BlockFi filed for bankruptcy which was financially tied to FTX.

Nonetheless, 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 failed, which is why we need blockchain technology,” Boring said of FTX and subsequent spinoffs.

Groups and conservationists have targeted the proof-of-work process in cryptomining for the huge amount of energy it requires – the burning of fossil fuels in the process to power huge computer servers.

“There are ways to create cryptocurrency that don’t have the same environmental energy concerns,” said Liz Moran, the NYPD 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 had called for the moratorium because of concerns about a cryptomining operation on Seneca Lake.

New York will also undertake a review of the effects of proof-of-work cryptomining on the environment, a process that will take place as New York already seeks to significantly reduce its carbon consumption.

“We need to make sure policies are in place so they don’t use so much energy – if that can be done,” Moran said. “So it will be up to New York State to assess now.”