Editorial Board: Bitcoin Industry Value Must Be Balanced Against Potential Environmental Costs | editorial

News Editorial Board

Cryptocurrency mining is in progress or in process at sites in Niagara Falls and North Tonawanda. The largest crypto-mining company in North America, Foundry, is located in Rochester.

The cryptocurrency industry is heading to upstate New York due to its abundance of inexpensive power, which promises to provide good-paying jobs to cities and towns that desperately need economic growth, but it is a risky business for the environment.

Bitcoins are not physical currencies. “Mining” cryptocurrency does not mean searching for something in the ground. Blockchain Technology, NFTs, and Web 3.0 – The terms seem to be part of a foreign language.

Ambiguous terminology and confusing aspects of the cryptocurrency industry have allowed it to get ahead of government regulators and establish a foothold in western New York and elsewhere in the north. However, more lawmakers are catching up in response to concerns about potential threats to the environment posed by new businesses. At the very least, New York State needs a cost-benefit analysis of having crypto entrepreneurs develop their businesses here.

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Last month, he introduced a bill in the State Assembly to the Ways and Means Committee that would put a two-year moratorium on cryptocurrency mining for “proof of work.” This is an energy-intensive process as computers race with each other to solve math puzzles to process and validate blockchain transactions. The bill would also require the state’s Department of Environmental Conservation to complete within one year a statement of environmental impact on crypto operations across the state.

A two-year freeze could be a step too far, potentially hampering the growth of an industry that could benefit the rural economy.

The alternative bill, co-sponsored by Majority Leader Crystal Peoples-Stokes of Buffalo, would require the creation of a task force to study the impact of cryptocurrency in New York and assess whether the industry aligns with the state’s climate goals.

Whether it is a task force created by the legislature or a study by the DEC, New York needs to understand the trade-offs involved in an ever-growing presence of the crypto industry.

Environmental groups like the Sierra Club want to ban bitcoin mining in the state, citing environmental damage. Bitcoin, the most popular of all cryptocurrencies, uses the same amount of energy in a year as Norway and Sweden.

Crypto industry representatives say these claims are exaggerated and that crypto miners are increasingly turning to renewable energy resources, a process that will accelerate as prices for renewables fall.

Foundry CEO Mike Collier recently met with The Buffalo News editorial staff. Collier said 20% of all bitcoin mining is done through Foundry’s pool. He said participants in their group get 73% of their energy through renewable energy.

“This is because in bitcoin mining, the algorithm pushes the miners into the cheapest and least expensive energy that is renewable energy,” Collier said.

However, even as miners choose renewable energy sources, the large amounts of electricity they consume can deprive them of the renewable energy supply available to homes and other businesses.

New York state set ambitious goals in the Climate Leadership and Community Protection Act of 2019, which calls for sharp cuts in greenhouse gas emissions in the coming years. By 2040, the country will generate 100% of its electricity from clean energy sources. Once a state task force is established, the cryptocurrency industry must demonstrate that power-hungry computers can coexist with New York’s climate goals.

Ground zero in the battle between the crypto-mining industry and New York state environmentalists is located in the small village of Dresden in the Finger Lakes. This is where Greenidge Generation, a cryptocurrency data center and power generation company, bought a retired coal plant, converted it into a 106 megawatt natural gas plant and used it to power a crypto mining business. Burning natural gas puts carbon into the air.

Greenidge has applied to the DEC to renew an air emissions permit. The agency deferred a decision while it considered information provided by Greenidge Generation on greenhouse gas mitigation strategies. The decision is likely to shape decisions about how the country deals with other crypto-mining operators.

There is a lot of enthusiasm in the country for the digital currency and its economic potential. New York City Mayor Eric Adams said he wants the city to become “the epicenter of the cryptocurrency industry.” Niagara Falls has many rooted cryptocurrency mining companies.

The boreal needs new resources to thrive when they can be achieved without throwing New York’s climate goals on a holocaust.

Bitcoin: The first and most valuable cryptocurrency, which was launched in 2009 as a “peer-to-peer electronic cash system”.

Blockchain: A digital ledger in which each transaction is verified by a network of computers and added as a “block” to the chain. It is the technology behind cryptocurrencies.

Decentralized Finance (DeFi): Financial activities that take place without the intervention of an intermediary, such as a bank or government.

Ethereum: The second largest cryptocurrency in terms of trade volume.

Non-fungible tokens (NFTs)Units of value used to represent ownership of unique digital items such as art or collectibles.

proof of work: Allows a party to use computers to solve a cryptographic puzzle to validate a transaction in mining.

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