Crypto: New York passes legislation banning some mining operations

Yahoo Finance senior reporter Jennifer Schonberger breaks down the latest information surrounding New York legislation placing a moratorium on carbon-powered cryptocurrency mining.

Video transcript

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SEANA SMITH: New York is cracking down on Bitcoin mining. Bitcoin taking a bit of a hit today, still below 30,000. We want to get to Jennifer Schonberger for the latest on this. Jennifer.

JENNIFER SCHONBERGER: Good afternoon, Seana. New York State Senate overnight passed a bill that would move to impose a two-year moratorium on crypto mining use of proof of work method involving carbon fuels in a move to preserve the environment. Now proof of work is the process by which new tokens for cryptocurrencies like Bitcoin are minted. It's an energy intensive process because it tends to use a lot of computers, and thus electricity, to make complex calculations to verify or prove the next block of Bitcoin or Ethereum is real.

Now, global carbon emissions last year for Ethereum and Bitcoin mining were equivalent to the tailpipe emissions of more than 15 and 1/2 million gasoline-powered cars on the road every year, that according to Cambridge Bitcoin Electricity Consumption Index. It also uses as much electricity as the country, Finland, in an entire year.

Steve McClurg, co-founder and CIO of Valkyrie Investments, says, the concerns about energy usage are misplaced. He says, quote, "This vote was clearly based on uninformed exaggerations of energy used by Bitcoin miners, which use renewable energy on a magnitude of nearly 2 to 1 against the rest of the US power grid." He says, they actively seek out green energy sources because they are more environmentally friendly and cost effective than fossil fuels.

China banned crypto mining last year, redirecting a lot of that mining to the US, which is now actually the number one crypto miner in the world. But with New York potentially banning mining, it could push crypto out of the state.

And that's something that Perianne Boring, founder and president of the Digital Chamber of Commerce, is worried about. She says, quote, "This is a significant setback for the state and will stifle its future as a leader in technology and global financial services." She goes on to say that this decision will eliminate critical union jobs and further disenfranchise financial access to the many underbanked populations living in the Empire State.

Now, this bill would also require an environmental study to be conducted. And those who are already conducting crypto mining operations in New York would be grandfathered in. Next, New York governors Kathy Hochul has about 10 days to decide whether to sign or veto this. Back to you.

JARED BLIKRE: Jennifer, you got to think that in the future, all of Bitcoin mining is just going to end up in Texas or something. But I want to shift gears a little bit. I know you're really tuned in to the regulatory front down there in DC. What's the latest you're hearing on crypto regulation?

JENNIFER SCHONBERGER: Yeah, so, obviously, we know about the whole Terra Luna blowup. And so I think there is a conservative effort here to really get some legislation and regulations underway to try to police runs on stablecoins and ensure that investors are properly protected.

The president has issued an executive order, and we are awaiting some studies right now from various agencies that will be due out this fall. And we're expecting some legislation imminently from the Senate, from senators Lummis and Gillibrand, who are expected to put forth some of the most comprehensive crypto legislation we have seen yet. So stay tuned on that, Jared.

JARED BLIKRE: I will stay tuned for sure. Thank you for that, Yahoo Finance's Jennifer Schonberger.