Bitcoin crashed to a new June monthly low of $29,200 as NY state moved to possibly crack down on certain forms of Bitcoin mining.
New York lawmakers passed a bill to ban Bitcoin mining activities running on carbon based power sources. The bill could still be vetoed by Kathy Hochul, NY Governor since 2021.
Or she could sign it into law – a possibility that saw the Bitcoin price, which had been steadily climbing back up over the past two days, drop and erase all its gains to hit a new low for June.
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Bitcoin Mining Ban
New York is the 4th largest US state behind California, Texas and Florida, with a population of 20 million people. In terms of its impact on Bitcoin, New York has been called ‘the center of the cryptocurrency industry’, beating Silicon Valley and Miami for the amount of crypto startup funding – $6.5 billion in 2021, according to business analytics platform CB Insights.
It could now become the first US state to ban Bitcoin mining, and if other parts of the United States then followed suit – it would be a large blow to cryptocurrency, unless Bitcoin miners all moved their operations elsewhere. USA based miners make up 37.84% of all Bitcoin mining, and Canada 6.48%. The US also leads in hashrate growth.
New York Bitcoin & Crypto Startup Funding – CB Insights
However Texas is pro Bitcoin mining and has been welcoming miners to move there, with Fort Worth city council voting unanimously to house Bitcoin mining rigs there in April.
In Bitcoin’s history other short term price crashes have occurred in response to China cracking down in Bitcoin mining – however Bitcoin did survive and miners kept working in other jurisdictions where necessary, so this new bearish news could be an opportunity to buy the dip.
China also didn’t completely ban Bitcoin mining, and as of May 2022 is still the second largest hub after the US, making up 21.11% of BTC mining.
New York BTC Mining Bill
The NY bill calls for Bitcoin mining operations to close down for two years if they use the proof of work mechanism as it is more energy-intensive, requiring large amounts of electricity. The proposed legislation is to lower NY state’s carbon footprint.
Bitcoin miners using 100% renewable energy sources would be allowed to renew their permits. Ethereum mining after the ETH 2.0 merge will use a proof of stake mechanism which aims to use 99% less energy and be more scalable.
Crypto proponents have pushed back on the narrative that Bitcoin is not eco-friendly, saying Bitcoin mining is not as bad for the environment as it used to be or when compared to other industries.
In the wake of an OpenSea employee being accused of NFT insider trading, some crypto Twitter accounts are also suspicious of this new legislation.
Lawyer and Head of Policy at the Blockchain Association Jake Chervinsky (@jchervinsky) tweeted:
‘You wouldn’t believe the tricks the NY Senate had to pull to pass the Bitcoin mining ban in the dark of night, e.g. they had to reassign the bill to get around the Environmental Conservation Committee, which was *against* it!
But it’s not over yet: Gov. Hochul can still veto.’
Bitcoin Investor @APompliano tweeted that the proposed Bitcoin mining ban could be deemed a violation of the Fifth Amendment and unconstitutional. His reasoning was that Bitcoin is a form of property and Bitcoin mining is a way to protect that private property.
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This article was written for Business 2 Community by Matt Williams.
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