The bitcoin market was still booming at the beginning of last year. When the price of one bitcoin reached over $40,000, prominent cryptocurrency businesses like FTX, Crypto.com, etc., sponsored advertisements.
All the while, the 2022 Super Bowl was urging individuals to make investments in cryptocurrency.
The recently elected mayor of New York City received his first three pay checks in Bitcoin. He promoted the currency everywhere he went.
And Bitcoin mining firms were moving en masse to New York, drawn by the state’s low electricity costs.
Things Appear Considerably Different A Year After
The value of one bitcoin is currently $20,000, and the mayor has largely halted bringing it up.
Sam Bankman-Fried is the flamboyant creator of FTX and a significant political supporter. He has been charged with federal customer theft and declared bankruptcy.
Additionally, a recent regulation that restricts bitcoin mining companies’ access to upstate power plants was approved by the state Legislature.
The New York bitcoin market’s fate is far from more certain than it has ever been. However, we must first comprehend the way the industry came to be in order to determine where it is headed.
Politics Surrounding Mining
Mining coins like bitcoin requires enormous levels of computational power and uses a lot of electricity by nature.
The enormous electricity usage is the basic foundation of bitcoin’s value, not only a byproduct of its system.
The proof-of-work mining model used by Bitcoin awards fresh bitcoins to computers known as miners who crack complex mathematical puzzles.
The one and only method the computer can figure them out are by making general assumptions. A modest sum of bitcoin is awarded to a miner when they unintentionally discover the right answer by chance.
When bitcoin was first announced in 2009, regular consumers were able to mine the cryptocurrency utilizing their home computers for a while. But over time, the calculations have become more complex.
In order to have any real chance of succeeding in mining Bitcoin, you now need huge data centers full of mining equipment.
Nowadays, professional cryptocurrency mining businesses dominate the bitcoin mining market. These businesses raise millions of dollars to build massive data centers.
They also buy the enormous amounts of electricity required to run their mining equipment. There is an unusual trend of cryptocurrency corporations purchasing their personal power plants.
It is the result of the industry’s growing need for additional electricity and the concentration of the Bitcoin mining market.
Greenidge Generation, which converted an unsuccessful upstate natural gas plant into a specialized mining facility in 2020, set the trend.
A natural gas plant close to Buffalo was actually bought by the Canadian cryptocurrency mining business Digihost.
This took place with ambitions to convert it into a specialized bitcoin mining facility.
In an effort to stop the purchase, environmental organizations have filed a lawsuit against the state Public Service Commission.
This must authorize the sale of any power plant. Assembly Member Anna Kelles proposed a proof-of-work bitcoin mining ban measure.
This was passed into law a year ago in an effort to stop additional bitcoin mining corporations from seizing fossil fuel-based power plants.
The bill will make it unlawful for the state Department of Environmental Conservation to issue new Title V air permits
Or even extend existing ones for two years to fossil fuel-based power plants that participate in proof-of-work cryptocurrency mining.
This would eventually preclude fossil fuel-based power plants from participating in crypto mining.
This will happen when their present permissions lapse, as power plants are not permitted to function lawfully without valid Title V air permits.
Since they currently have the required air permits, both Greenidge and Digihost will not be impacted by the moratorium.
However, the legislation will bar any more plants from switching to cryptocurrency, over the next two years minimum.
Cryptocurrency mining businesses that own fossil fuel power plants are the only ones subject to the prohibition.
Miners who merely purchase their energy from the grid or who operate hydroelectric facilities are unaffected. The bill mandates the department to create a comprehensive environmental impact statement.
It is supposed to outline the implications of cryptocurrency mining on New York’s environmental objectives in relation to enforcing the restricted ban.