United States: The bitcoin crackdown and the need for the industry to go green

According to reports, the State of New York is seeking to implement a ban on new bitcoin mining operations in order to decrease its carbon footprint. The proposed bill would, if passed, place a two-year moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions - a big energy drain. One part of the bill details a statewide study into these operations’ environmental impact, assessing this in conjunction with its climate goals under the Climate Leadership and Community Protection Act.

This potential legislative change, according to the crypto industry, would weaken New York’s economy, and has been met with significant pushback by industry figures. Galaxy Digital’s Head of Mining, Amanda Fabiano, said: “New York will be left behind, losing to other states at best, and at worst, other more progressive nations.” He went on to say that this move could set a “bad precedent” and that other states may decide to follow. It has also been argued that the ban could potentially stifle investment in sustainable energy sources. Former presidential candidate and New Yorker Andrew Yang told CNBC: “In my mind, a lot of this stuff is going to end up pushing activity to other places that might not achieve the goal of the policymakers.” 

Looking ahead, the changing energy landscape will also impact bitcoin's footprint. According to experts, renewable energy capacity is forecast to be 50% higher over the period of 2021 to 2026 compared with 2015 to 2020. As this evolves, and renewable energy becomes cheaper, those in the field have said bitcoin miners will start to subsidize renewable energy buildout. 

Bitcoin mining has long been an environmental concern, which, more recently, has pushed companies in the industry to purchase carbon offsets, which are also a controversial practice often deemed a greenwashing technique. Through carbon offsets, a number of bitcoin companies have also misleadingly claimed carbon neutrality. Some suggestions that could help push companies to become genuinely carbon neutral include building facilities next to data centers, whereby the bitcoin mining operations could utilize excess energy via zero carbon displacement. This is a practice that has been adopted in Norway by Bitzero. Other companies are simply taking advantage of renewable energy in locations where local demand and local load is low to stabilize the grid. Other approaches are being taken, too, including using the energy from excess gas.

Speaking to Cointelegraph, Alex Tapscott, author and co-founder of the Toronto-based Blockchain Research Institute, explained how this model can be beneficial: “A typical Bakken well produces oil but also natural gas which is burned off or flared into the atmosphere. This is a significant source of carbon entering the atmosphere. Instead of flaring the gas, Exxon has partnered with Denver-based Crusoe Energy to capture gas and divert it to generators where it mines Bitcoin.”