The Editorial Board: The value of the Bitcoin industry must be weighed against possible environmental costs | Editorial

The cryptocurrency industry has been attracted to upstate New York by its abundance of cheap power. While it promises to bring good-paying employment to cities and towns in desperate need of economic growth, it is also a business that poses risks to the environment.

Bitcoins are not real coins. Cryptocurrency mining is not about digging for something in the ground. NFTs, Blockchain technology, Web 3.0, and other terms may seem like a foreign language.

The industry’s confusing terminology and complex structure have allowed it the ability to outperform government regulators and establish a foothold across New York State, including Western New York. In response to potential threats to the environment posed by these new businesses, more lawmakers are being enacted. New York State must at least do a cost-benefit analysis to allow digital currency entrepreneurs to grow their businesses in the state.

A bill that would have put a moratorium on proof of work cryptocurrency mining was passed by the State Assembly last month. It is an energy-intensive process that involves computers racing against each other to solve math problems to validate and process blockchain transactions. The bill would also require that the state Department of Environmental Conservation complete within one year a report on the environmental impact of crypto operations in the state.

The two-year moratorium could be too restrictive and may hinder the growth of an industry that could be beneficial to the upstate economy.

A second bill, co-sponsored by Assembly Majority Leader Crystal Peoples of Buffalo, would create a task force to study cryptocurrency’s impact in New York and determine if it is compatible with climate goals.

New York needs to understand both the trade-offs and the benefits of having a growing crypto industry presence, regardless of whether it is a taskforce created by the Legislature.

The Sierra Club, an environmental group, wants Bitcoin mining to be banned in the US. They cite the dangers to the environment. Bitcoin, the most widely used cryptocurrency, consumes as much energy per year as Norway or Sweden.

Representatives of the crypto industry say that such claims are exaggerated. They also claim that crypto miners are shifting to renewable energy resources as they become more affordable.

Mike Colyer, Foundry’s CEO, met recently with The Buffalo News’ editorial board. Colyer claimed that Foundry’s pool software accounts for 20% of all Bitcoin mining. He said that 73% of the power generated by renewable energy is used by participants in their pool.

Colyer explained that Bitcoin mining uses an algorithm that drives miners to the lowest energy cost and renewable energy.

Nevertheless, even though miners may choose renewables, the large amount of electricity they consume can reduce the supply of renewable power that is available to homes and businesses.

New York State has set ambitious goals in its 2019 Climate Leadership and Community Protection Act. This Act calls for dramatic reductions of greenhouse gas emissions in the coming years. The state must produce 100% of its electricity from renewable sources by 2040. Once a task force has been established by the state, the cryptocurrency industry must demonstrate that its power hungry computers can coexist with New York’s climate goals.

The Finger Lakes small village of Dresden, New York is where the battle between crypto mining and environmentalists in New York State’s state capital is at its center. Greenidge Generation, which is a cryptocurrency data center, power generation company and power generator, purchased a former coal plant, converted to a natural gas plant of 106 megawatts, and uses it for its crypto mining business. Burning natural gas releases carbon into the air.

Greenidge applied to the DEC to renew its air emissions permit. The agency is awaiting information from Greenidge Generation regarding its greenhouse gas mitigation strategies. This decision will likely influence how the state treats crypto mining operators.

Digital currency is gaining a lot of interest in New York State. Eric Adams, New York City’s Mayor, has stated that he wants the city be the center of cryptocurrency. Many crypto mining companies are establishing roots in Niagara Falls.

Upstate needs new sources for prosperity when it is possible without turning New York’s climate goals into an incinerator.

Bitcoin: The most valuable cryptocurrency launched in 2009 as a peer to peer electronic cash system.

Blockchain: A digital ledger where each transaction is verified by a network computer network and added to the chain as a block. It is the technology that underpins cryptocurrencies.

Decentralized finance (DeFi).: Financial transactions that are not facilitated by an intermediary like a bank, government, or other financial institution.

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

Non-fungible tokens (NFTs): These units of value are used to indicate ownership of unique digital objects such as art and collectibles.

Proof-of-workIt allows a party use computers to solve cryptographic puzzles to validate a mining transaction.

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