New York is the first state to ban certain types of crypto mining

New York just became the first state to ban certain types of cryptocurrency mining to address environmental concerns about the energy-intensive process.

“I will ensure that New York remains at the center of financial innovation while taking important steps to prioritize protecting our environment,” New York Governor Kathy Hochul said in a message after she signed the law November 22 had signed.

The new law temporarily freezes the issuance and renewal of permits to fly for companies that have turned some of the state’s oldest fossil-fuel power plants into cryptocurrency mining hubs.

However, the ban does not affect individual cryptocurrency miners.

The legislation specifically targets cryptocurrency mining companies in the state that consume large amounts of energy by using proof-of-work authentication — the process that sometimes uses millions of high-performance computers to authenticate transactions in bitcoin and track other virtual currencies and secure currencies.

Crypto mining can create harmful emissions by generating electricity by burning coal, natural gas, and other fossil fuels.

After China began cracking down on bitcoin mining in 2021, the availability of cheap energy from Niagara Falls and disused power plants made upstate New York a popular hub for mining digital currencies.

However, as companies flocked to the region, climate advocates began to sound the alarm about the potential environmental damage from crypto mining.

“Crypto not only takes a toll on the environment, but upstate New York communities could suffer as once-abandoned coal-fired power plants rise from the dead as ‘zombie plants’ mining crypto all day, every day,” Richard Schrader said the New York Legislative and Policy Director of the nonprofit Natural Resources Defense Council in a statement.

The new law also requires the New York City Department of the Environment to investigate the impact of the crypto mining industry on the environment during the two-year moratorium as the state seeks to reduce its carbon footprint.

Nationally, US crypto mining generated about 25 to 50 million tons of carbon pollution, according to a White House report. That’s roughly the equivalent of driving 20 to 40 million gasoline-powered cars for a year, according to the Environmental Protection Agency.

The crypto industry has tried to address concerns about its energy use and carbon emissions.

In September, Ethereum, the largest blockchain behind Bitcoin, switched to a more energy-efficient method of validating crypto transactions taking place on the platform, known as Proof-of-Stake (PoS).

This upgrade is said to reduce Ethereum’s carbon footprint by over 99%, according to its website.

Would you like to earn more and work less? Register for the free CNBC virtual event Make It: Your Money on December 13th at 12pm ET to learn from money masters how to increase your earning power.

Do not miss: Mark Cuban Still Believes in Crypto Despite FTX Collapse — Here’s Why

How the counterfeiting problem in Indonesia spurred a multi-million dollar beauty business