On November 22, Kathy Hochul, New York State Governor, signed the Proof of Work (PoW) moratorium bill into regulation almost four months after the senate permitted the freeze bill.
Kathy Hochul signed the PoW mining freeze bill into regulation a few days ago, making it the first American State to forbid any proof of work cryptocurrency mining activity for 24 months.
Understanding Proof of Work (PoW)
PoW was initially proposed in 1993 to combat spam emails on denial and network of service attacks. The concept of proof of work was then made known by Satoshi Nakamoto in 2008 to authenticate a new block in the BTC network.
This law is based on the network holder’s capacity to show that a computational job is done. Much computing power called a node is used to respond to a mathematical equation, and when the equation is answered, a new block of the chain is verified. Nodes refer to physical devices such as desktops that send, forward, or receive information in other tools networks.
The solver, which answers the puzzle the fastest, will make a cryptographic linkage between the past and existing blocks and get some newly minted crypto tokens. The process is called mining, and the solver is called the miner. Through combined efforts, a blockchain stays secure for both parties involved.
What is more, the computational task of answering the puzzle is called proof of work.
PoW makes double spending extremely hard, as changing any portion of the blockchain would involve re-mining all the following blocks. As the power and machinery needed to carry out the hush functions are costly, it makes not possible for users to monopolize the processing capacity of the network.
The Prohibition of the Mining Moratorium
The proof of work mining moratorium will not just prohibit or ban new mining operations but also decline the renewal of permits for those already working in New York. Any further proof of work mining operation in NY could operate once it utilizes 100 percent renewable energy.
The mining bill was initially passed in April 2022 by the state assembly and, in June, got the doze of the State Senate. The moratorium bill was finally signed into regulation by New York Governor Hochul owing to pressure from lobbyists to meet the carbon immersion target. She said, “I will make sure that New York City keeps on being the center of financial innovation, taking vital steps to prioritize the security of our environment.
Bitcoin miners and other altcoins predominantly employ proof of Work agreements. It is regarded as one of the most decentralized and safest methods of authenticating a deal on a blockchain. On the other hand, issues have blemished the practice of its high power consumption.
At present, the US sits at the top of the BTC mining hash rate share, with 37.8 percent of the BTC network hash rate originating from the United States. The 24 months moratorium on proof of work mining can prove expensive and even create a domino effect for other regions of the US to follow on the same path.
Chamber of Digital Commer, a blockchain advocacy group, called out the fake thread on Twitter:
The New York City fight against the energy use by the mining industry is exponentially further than other businesses and is blatantly fake. The Climate Leadership and Community Protection Act needs New York City’s greenhouse gas emissions to be lessened by 85 percent and obtain net zero emissions in all departments by 2050.
The proof of work mining FUD is not new and has been discredited a lot of times over. Still, there has been a considerable lobbying effort in the last couple of years, particularly from the advocates and supporters of PoS mining. Chris Larsen, the co-founder of Greenpeace and Ripple, has been campaigning for a modification in the BTC code.
On the other hand, lawmakers have expediently sidelined available research data that a considerable chunk of BTC mining energy is derived from renewable sources. According to the report of the BTC mining council, over 60 percent of the power consumption by the Bitcoin network derives from clean sources.
Crypto regulators in Europe had suggested the same proof of work interdict in their MiCA or Markets in Crypto Assets legislative. On the other hand, supporters of outlawing operations with evidence of work-based digital coins couldn’t muster enough help, meaning Markets in Crypto Assets legislation was passed with no banning.