Hard blow for Bitcoin. Minors, or internet users tasked with validating transactions in bitcoin and other cryptocurrencies, have just had their activity banned in New York State if it uses electricity produced from fossil fuels.
The ban follows Democratic Gov. Kathy Hochul’s enactment of legislation passed in the spring by the New York State legislature on Tuesday. This text provides for a moratorium on mining activities when they consume fossil fuels. The decision is historic as New York State is the first to suspend all or part of these activities. It was particularly prompted by the fact that several mining companies have, in recent years, taken over old power plants in this US state to run their machines used to validate cryptocurrency transactions.
The high electricity consumption of cryptocurrency mining
Some digital assets registered on a blockchain are accused of consuming a lot of electricity. In question, the very operation of mining using the method known as proof of work or “proof of work”. The latter consists of making a computer perform a series of complex calculations as quickly as possible in order to be declared the winner and obtain the right to validate a series of cryptocurrency transactions in order to win one or more units of cryptocurrency. However, the more miners there are competing, the harder it is to win. Miners therefore have to purchase graphics cards and other machines to perform computer calculations. Machines that consume a lot of electricity today.
According to the specialized company Digiconomist, the extraction or creation of a bitcoin, the most popular cryptocurrency in the world, requires around 1,150 kilowatt hours, which is the average consumption of an American household for 40 days. An index developed by the University of Cambridge shows that on November 23, Bitcoin mining consumes 90 terawatt hours per year, or almost a quarter of French electricity consumption in 2019, which was 473 terawatt hours according to EDF.
It is however possible not to go through mining and its “proof of work” method which is too greedy for electricity. Indeed, many cryptocurrency networks have switched to validation by stake test or “proof of stakes” which does not require calculations with energy-intensive machines. Many cryptocurrencies such as the second largest, Ethereum, have already switched to this new validation method. Bitcoin, on the other hand, remains anchored in proof-of-work and is therefore still very electricity-intensive.
Mining in the sights of the authorities
This moratorium, followed by a temporary ban on mining, should give New York State time to assess the extent of the impact of this activity on its territory.
Cryptocurrency mining has already been banned in several countries such as China in June 2021. Up until that date, the country was by far the world leader in creating virtual currencies. A place that has since returned to the United States, now the world’s largest producer of cryptocurrencies, notably welcoming Chinese miners.
Even in Europe, some countries have banned proof of work mining, such as Kosovo in January 2022. The latter has notably decided to ban this activity due to its energy supply problems which have caused frequent power outages. The energy crisis affecting the world is likely to prompt other countries to ban cryptocurrency mining.
(with AFP)
