The state was once a draw for miners, but environmental concerns are weighing on the bitcoin mining industry.
New York’s bitcoin mining companies are increasingly considering abandoning their aspirations in what was once a promised land as the state’s legislature considers a bill to ban new mining projects that use carbon-based energy sources pending a review of the industry’s environmental impact.
The New York State Senate is looking at a bill calling for a two-year moratorium on new crypto mining projects that use gas, coal or other nonrenewable energy sources, after the Assembly version of the bill passed the state’s lower house last week.
“All cryptocurrency companies have a permanent hold on starting businesses in New York due to the political and regulatory ambiguity. If the bill were to pass, New York would become a permanent afterthought for the industry,” said Kyle Schneps, director of public policy at Foundry, one of the largest miners in the U.S., which is based in Rochester, New York. Foundry is owned by CoinDesk’s parent company, Digital Currency Group.
Foundry’s planned expansions in the state “will be curtailed along with hiring,” Schneps said.
The bill, which passed to the state Senate in late April, calls for a moratorium on proof-of-work mining powered by nonrenewable sources, the type used in the Bitcoin network, in the state while its environmental impact is assessed.
Most crypto mining companies are staying away from the state because of authorities’ seemingly negative stance towards the industry, said Whit Gibbs, CEO of Compass Mining, a hashrate marketplace that matches miners with investors around the world.
Didar Bekbau, co-founder of Kazakhstan-based miner Xive.io, who wants to expand operations into the U.S., told CoinDesk that he is leaning towards Texas because of favorable regulation and the availability of cheap electricity.
Regulatory uncertainty, including the bill, is one of a few factors driving potential mining firms away from the state of New York, one executive from a local mining hosting firm told CoinDesk. Increases in energy prices are another reason why firms are staying away from the state. The executive attributed the uptick in electricity rates to global macro events such as the conflict in Ukraine as well as the growing cost of complying with renewable energy mandates in New York. The executive asked not to be identified, citing fear of retribution from environmental advocates and local officials.