Environmental organizations in New York on Tuesday evening cheered the approval by Gov. Kathy Hochul of the first-ever moratorium on a process key to the volatile cryptocurrency sector.
But the crypto industry, while expressing a desire to continue to press their concerns in the state Legislature, indicated it may simply leave New York for states that are friendlier.
The development was the culmination of an increasingly intense lobbying effort by environmental groups to put the moratorium in place for proof-of-work cryptomining, a complex process they argue takes a tremendous toll on energy in order to be successful, and one that flies in the face of New York's planned goals for reducing its carbon footprint in the coming decades.
"This first-in-the-nation law should set the standard for every other state where crypto miners are coming in, extracting resources, and wreaking havoc," said Liz Moran of the group EarthJustice.
Statewide business organizations, including the cryptocurrency industry itself, decried the moratorium as detrimental to an industry that still has the potential to create jobs, especially in upstate New York.
"The Business Council does not believe the legislature should seek to categorically limit the growth and expansion of any business or sector in New York," the group said in a statement. "We plan to further engage and help educate them regarding this industry and the benefits it provides to the local, regional, and state economy."
The flashpoint for the controversy over cryptomining was in the Finger Lakes region, with Seneca Lake as the site of a facility warehousing servers to generate the tokens used in generating digital currency. In other words, the virtual currency, they argued, had real-world implications.
Advocates had compared the effort to the previous decade's campaign against hydrofracking in the Southern Tier region of upstate New York. At the time, similar arguments were made: The process was backed by business entities that saw the potential energy source as an economic boon; conservation groups called the extraction process a hazard for the area and state.
The campaign against cryptocurrency mining marshaled the backing of local businesses in the Finger Lakes region, who had argued the process put their livelihoods at risk.
"This is a victory for our climate and communities over greedy corporations. By signing the moratorium bill, Hochul has taken an important and necessary step towards moving New York off fossil fuels," said Eric Weltman, an official with New York Food and Water Watch. "New York has no hope of achieving its climate goals if we allow the burning of fossil fuels for cryptocurrency mining."
The moratorium is being coupled with having state officials conduct an environmental assessment of the process for cryptomining and its effects on the surrounding ecology as well as climate.
For the industry, the moratorium in New York also comes amid broader uncertainty following the collapse of the crypto exchange FTX and the reported investigations as a result.
Still, businesses involved in proof-of-work mining may simply leave the state for elsewhere as the industry itself evolves.
"The PoW mining industry has been spurring economic growth, job creation, and inclusion for historically underrepresented populations in New York, while also creating financial incentives for the buildout of renewable energy infrastructure," said the Chamber of Digital Commerce in a statement. "With this legislation becoming law, we expect the mining organizations, or those considering business in the state, to leave and head to more friendly regulatory jurisdictions in the U.S. – a trend far too many industries in New York State are realizing daily."