The New York State Assembly recently approved legislation that would hinder economic opportunity and innovation across the state at a time when job and economic growth are crucial for the state’s economy.
Assembly bill A.7389C sets a moratorium on approving new applications or permits for digital asset mining operations, also known as proof-of-work mining, that use electric power generated by carbon-based fuels, such as coal. But this shortsighted proposal will accomplish little for the environment and bring real harm to areas of New York that are working to attract new, innovative businesses.
Teana Baker-Taylor is the chief policy officer for the Chamber of Digital Commerce, a leading trade association for the digital asset and blockchain industries.
Proof-of-work authentication verifies blockchain transactions for Bitcoin, and like all industrial activity, it uses energy. It’s a misconception, however, that proof-of-work mining uses more energy than other industries. New York policymakers have set aggressive goals to mitigate climate change. In 2019, the state implemented the Climate Leadership and Community Protection Act, requiring that statewide greenhouse gas emissions be reduced 85% by 2050, and that the state have net zero emissions in all sectors of the economy by that time.
In 2020, it was estimated that proof-of-work used 247 terawatts of power, which is about 0.16% of global energy consumption. Eliminating proof-of-work mining would not put a meaningful dent in carbon emissions and will slow progress in transitioning this country to more renewable energy production and usage.
Transitioning to greener energy sources requires significant investments in new energy technology from industries that are committed to working with policymakers and the energy industry. Proof-of-work miners serve as reliable base customers who provide consistent demand – and revenue – for utilities to build out clean energy infrastructure. An added benefit: They can power down to redeploy critical use of power elsewhere, almost instantly, something other high-demand industries simply cannot do.
For example, on occasions when customer demand spikes during the height of summer in Manhattan, or dead of winter in Buffalo, digital asset miners can work cooperatively with utilities to curtail their demand. The power being used by proof-of-work miners flows back to the grid giving retail consumers extra capacity in mere minutes with no adverse effects. No other industry that uses similar levels of energy, including data centers, cloud service providers and manufacturing facilities, has the ability to do this.
It’s also important to note that even as digital asset mining has increased in its adoption over the past few years, the Bitcoin Mining Council estimates that the global mining industry’s sustainable electricity mix is 58.5% and growing. The percentage for members of the Chamber of Digital Commerce Mining Initiative with infrastructure in New York is estimated to be even higher, closer to 80%. Few industries can boast such an environmentally friendly profile.
This sustainability impact will only continue to grow over time as digital asset miners form partnerships with energy providers, utilities, communities and other groups to develop new energy capacity in New York by providing new and valuable economic incentives for energy companies to build green infrastructure and sources of power. Evolving proof-of-work operations will increasingly shift to more efficient ways to power operations, while paying dividends to local communities, including jobs, particularly union jobs with groups such as the International Brotherhood of Electrical Workers (IBEW) and increased local and state tax revenue.
Many states want to encourage digital asset mining operations and are poised to attract New York-based companies seeking a more welcoming environment. Georgia and Illinois have proposed tax incentives to attract digital asset mining companies to build facilities in their state. In Texas, stakeholders have noted that proof-of-work mining has helped stimulate the economy, create jobs, promote the development of renewable energy, such as solar and wind, and improve their tax base.
Digital assets technologies are an emerging, global financial industry. By some estimates, more than 100 million individuals worldwide have adopted Bitcoin. Proof-of-work mining is the foundation of this ecosystem. Digital assets are creating an opportunity for millions of people in less fortunate economic circumstances to access the financial system by storing their savings in a medium that is independent of rapidly increasing inflation, banks fees and long-standing inequities in our banking system.
It’s crucial that New York remains a leader in global financial services, rather than hindering an industry that is important to its future. Working together, the digital asset mining industry and New York can set the standard for expanding sustainable, ethical, business growth. The state Senate should vote down this proposal when it comes up for a vote in the coming days.