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The Editorial Board: The Value of the Bitcoin Industry Must Be Weighed Against Potential Environmental Costs | Editorial

ByHazel R. Lang

Apr 23, 2022

News Editorial Board

Cryptocurrency mining operations are underway or underway at sites in Niagara Falls and North Tonawanda. North America’s largest crypto mining company, Foundry, is located in Rochester.

Attracted to upstate New York for its abundance of cheap energy, the cryptocurrency industry promises to bring well-paying jobs to cities and towns in dire need of economic growth, but it It’s a business full of environmental risks.

Bitcoins are not physical coins. Cryptocurrency “mining” does not mean digging for something in the ground. Blockchain technology, NFT, Web 3.0 – the terms seem like part of a foreign language.

The arcane terminology and confusing aspects of the digital currency industry have allowed it to outpace government regulators and gain a foothold in Western New York and elsewhere upstate. However, more lawmakers are catching up in response to concerns about possible threats to the environment from new businesses. At a minimum, New York State needs a cost-benefit analysis for digital currency entrepreneurs to grow their businesses here.

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Last month, a bill in the State Assembly was introduced to the Ways and Means Committee that would impose a two-year moratorium on “proof of work” cryptocurrency mining. It is a power-intensive process where computers compete to solve mathematical puzzles to process and validate blockchain transactions. The bill would also require the state Department of Environmental Conservation to complete an environmental impact statement on crypto operations statewide within one year.

The two-year moratorium may be a step too far, potentially stunting the growth of an industry that could benefit the upstate economy.

An alternative bill, co-sponsored by Assembly 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 is compatible with state climate goals.

Whether it’s a task force created by the Legislature or a DEC study, New York must understand the trade-offs involved with an ever-growing crypto industry presence.

Environmental groups such as the Sierra Club want Bitcoin mining banned in the state, citing environmental damage. Bitcoin, the most popular of all cryptocurrencies, uses as much energy in a year as Norway and Sweden.

Crypto industry representatives say these claims are exaggerated and that crypto miners are increasingly turning to using renewable energy resources, a process that will accelerate as the price of renewable energy rises. will drop.

Foundry CEO Mike Colyer recently met with The Buffalo News editorial board. Colyer said 20% of all bitcoin mining is done through Foundry’s pool software. Participants in their pool, he said, get 73% of their electricity from renewables.

“It’s because in bitcoin mining, the algorithm leads miners to the cheapest energy, and the cheapest energy is renewable energy,” Colyer said.

Yet even if miners choose renewable energy, the large amounts of electricity they consume can reduce the supply of renewable energy available to homes and other businesses.

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

Ground zero of the battle between the crypto-mining industry and New York State environmentalists is in the tiny Finger Lakes village of Dresden. 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 uses to fuel his crypto-mining business. Burning natural gas releases carbon into the air.

Greenidge applied to DEC to renew its air emissions permit. The agency deferred its decision while it studies information submitted by Greenidge Generation on its greenhouse gas mitigation strategies. The decision is likely to influence decisions on how the state treats other crypto-miners.

There is a lot of enthusiasm in the state for digital currency and its economic potential. New York City Mayor Eric Adams said he wants the city to become “the center of the cryptocurrency industry.” Niagara Falls has several crypto mining companies taking root.

Upstate needs new sources of prosperity when it can be achieved without throwing New York’s climate goals into an incinerator.

Bitcoin: The first and most valuable cryptocurrency, launched in 2009 as a “peer-to-peer electronic payment 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 carried out without the intervention of an intermediary, such as a bank or a government.

Ethereum: The second largest cryptocurrency by trading volume.

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

proof of work: It allows a party to use computers to solve a cryptographic puzzle to validate a transaction in the mining sector.

What is your opinion? Send it to us at lettertoeditor@buffnews.com. Letters should be a maximum of 300 words and should express an opinion. The column does not print poetry, community event announcements, or thank-you letters. A writer or household can only appear once every 30 days. All letters are subject to fact checking and editing.

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