New York Governor Kathy Hochul has signed into law a bill clamping down on bitcoin mining within the state.
The legislation places a two-year ban on new permits being issued or existing permits being renewed to conduct fossil fuel-powered proof-of-work (PoW) crypto mining operations. PoW is a particularly energy-hungry method for verifying transactions on the blockchain used by popular cryptocurrencies, including bitcoin.
New York Imposes 2-Year Moratorium On Bitcoin Mining
On Tuesday, New York Governor Kathy Hochul signed a law that will ban most cryptocurrency mining, becoming the first state in the United States to curtail the country’s global dominance in bitcoin mining.
In a statement explaining her approval, Hochul said she wanted New york to remain the “center of financial innovation” but also emphasized the need to address the growing concerns about the environmental impact of energy-intensive blockchain operations.
The law only imposes a temporary, two-year ban. Unless a firm uses renewable energy sources, it would not be allowed to continue operating in the Empire state.
The bill was passed by the New York State Senate earlier in June this year, but Governor Hochul had until now withheld from signing it into law due to frenetic industry lobbying.
New York Has Considerable Hashrate Share
Upstate New York has emerged as a popular destination for miners in the United States due to its cheap hydroelectric power and idle coal power plants, which can be redeployed into huge mining farms.
Data shows that New York-based mining firms accounted for approximately one-fifth of the U.S. bitcoin mining hash rate as of late last year. However, New York’s mining hash rate has since dropped significantly in the face of the ban.
In addition to pausing renewals for the existing operating permits, the new law will also prevent mining facilities with pending applications from beginning their operations.
Nonetheless, the enacted moratorium is not as harsh as the previously proposed bills, which called for a three-year ban on all crypto mining activities in New York. That being said, the restrictive laws could set a dangerous precedent for other states in the U.S.
That’s driven lots of new interest to some of the earliest decentralized players. Dan Gunsberg, creator of Solana-based derivatives exchange Hxro, said that in recent weeks he’s seen a boom in interest for his trading platform, which he claims cannot fall prey to the same pain points that felled FTX and its sister company, Alameda.
While bitcoin prices have been lower than the estimated cost of bitcoin production, the network’s hashrate has dropped a great deal since mid-November. Presently, the total hashrate dedicated to the Bitcoin network is coasting along at 236 exahash per second (EH/s) after dropping below the 200 EH/s range six days ago.
Bitcoin’s Hashrate Slips Lower
The first week of November 2022 was brutal for digital currency prices as FTX’s collapse rippled across the entire industry in a negative fashion. Prior to the FTX fallout, bitcoin was trading above the $20K zone and the network’s total hashrate was coasting along at roughly 270 to 290 exahash per second (EH/s) before the blowout.
There was a quick burst of increased hashrate the day after FTX filed for bankruptcy and BTC’s total hashrate tapped an all-time high on Nov. 12, 2022. At block height 762,845, bitcoin miners managed to get the hashrate to briefly rise to a whopping 347.16 EH/s. Since then, the hashrate has divebombed and slid below the 200 EH/s range on Nov. 26.
Presently, bitcoin miners have managed to rise above the 200 EH/s region, to the current 236 EH/s recorded at 10:15 a.m. (ET) on Dec. 2, 2022. The drop in hashrate indicates that unprofitable mining entities have been forced to shut down machines, while only the strong operators survive.
At the time of writing, the estimated cost of bitcoin production ($16,956) is awfully close to the leading crypto asset’s spot market value ($16,897). Previously, the cost of bitcoin production was $18,313 on Nov. 30, which was significantly higher than BTC’s spot market value. With a drop in BTC production costs, it makes it easier for current operators to survive.
Bitcoin miners are also expecting a large mining difficulty reduction between 6.56% to 7.9% lower than today’s difficulty rating on or around Dec. 5, 2022. Presently, the estimated mining difficulty reduction could be the largest difficulty drop the network has seen in 2022. Since Nov. 30, up until Dec. 2, 2022, roughly 80 exahash of hashpower has been removed from the network’s total hashrate.
What do you think about the current state of Bitcoin’s hashrate? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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