New York’s Potential Ban Can Cripple Crypto Miners
The real fear of investors is that the feds might catch up with them. Bitcoin has witnessed a bad month. But even with a 15% drop from its March high to about $40,000, most miners should not find it hard to turn an operating profit with costs between $4,500 and $16,000 to mine a coin.
Even so, the stocks have been crushed. Marathon Digital Holdings (ticker: MARA) dropped around 46% last month while Riot Blockchain (RIOT) was cut in half, and Core Scientific (CORZ) lost 29%.
Amid these drops, the New York State Assembly Tuesday announced a bill that would levy a two-year moratorium on new crypto mining operations powered by fossil fuel. Crypto mining demands an outrageous amount of energy to run the algorithms that power the networks of Bitcoin and other “proof-of-work” cryptocurrencies. According to crypto proponents, it is unfair for governments to favor one use of cryptocurrency over another, but at least among Democrats, anti-mining activists appear to be gaining sway.
The final bills passed by the assembly were not as strong as the environmental activists hoped they would be. But it still managed to prompt a strong response from crypto advocates, like the Blockchain Association based in Washington, D.C., which tried to get New York residents to oppose the bill by flooding the state offices with calls, emails, and tweets.
The New York State Senate can consider its bill until the close of the session. If it manages to pass, it could potentially cause a deep rupture between the industry and the state, according to some crypto executives. It will give pause to miners and also other crypto firms who now fear other actions the legislature could take.
This would severely impact any and all investments in New York. Moreover, a New York ban, even a temporary ban, would be alarming for miners in left-leaning states and countries; environmental concerns could translate to legislative blowback that crimps their bottom lines.
Just to be sure, many publicly traded miners’ operations are based in states that are unlikely to pass a ban voluntarily. For example, the main facility of Riot is in Texas, and Marathon’s is in Montana. Some miners want to rely on renewable energy to power facilities.
However, the federal government appears to give importance to the environmental impact of crypto mining as well. However, it is not just not new laws miners have to fret over. Even if they manage to avoid legislative defeat in New York, regulatory problems loom.