Crypto law: miners in the crosshairs

Miners targeted by a new crypto law to cease operations if consumption exceeds a certain energy threshold.

Gov. Kathy Hochul signed the much-discussed Crypto-Asset Environmental Transparency Act, the bill, which had bounced back through a thousand discussions and created heated debates is now a new crypto law. 

The moratorium is aimed at protecting and overseeing the environment by giving substance to a legislative journey that began as early as this summer with the various debates in the chambers.

US lawmakers in the Crypto-Asset Environmental Transparency Act decided to include a newly created oversight body named the Environmental Protection Agency (EPA). 

The EPA is tasked with certifying megawatt consumption in cryptocurrency mining activities with due investigation. 

The new crypto law restricting mining activity

The maximum limit of power that can be used for crypto mining is five megawatts, and there are no exemptions on the required power of any kind. 

Speaking about the introduction of the Crypto-Asset Environmental Transparency Act and the introduction of the Environmental Protection Agency (EPA), Jared Huffman spoke with these words:

“Giving this industry impunity to inflict such environmental damage runs counter to numerous federal policies, and we need to understand the full harm this industry presents. My bill with Senator Markey will require cryptomining facilities to report their emissions of carbon dioxide, as well as a detailed interagency study on the environmental impact of cryptocurrencies, finally closing the curtain on this sector.”

The concern prompted US lawmakers to enact the law that effectively condemns Bitcoin miners, but crypto in general is also aimed at noise and water pollution caused by miners and not just the energy crisis. 

In support of the new restrictive law on cryptocurrencies or at least those based on “Proof of Work” such as Bitcoin is, Scott Faber, senior vice president for government affairs at the Environmental Working Group, put it this way:

“The recently completed Ethereum merge and past code changes show that transformation by the bitcoin community is possible: how we have all adapted to new ways of powering our homes and cars, and how which we grow our food. […] Every industry, including the financial sector, can reduce electricity consumption and greenhouse gas emissions. Rising electricity demand, as evidence of mining work will eventually require, is sending us in the wrong direction.”

Citing the example of Ethereum’s Merge, Faber advocates a possible change from “Proof of Work” to “Proof of Stake” for all those mining-based cryptocurrencies like BTC. 

A month and a half ago, at the request of Massachusetts Senator Elizabeth Warren and other members of the US Congress, mining‘s energy consumption and potential impact on the environment was investigated. 

The question was seized upon by the head of the Electric Reliability Council of Texas who prepared a detailed report on consumption and environmental consequences. 

The report was instrumental in the decision to sign the Crypto-Asset Environmental Transparency Act, which is now law.