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Bitcoin Mining Becomes Matter of Concern for NYDFS

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Thu, 10/29/2020 - 15:47
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Alex Dovbnya
New York's top financial regulator urges more transparency in the Bitcoin mining sector
Bitcoin Mining Becomes Matter of Concern for NYDFS
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In her Oct. 29 letter to regulated financial institutions, Linda Lacewell, the superintendent of the New York State Department of Financial Services (NYDFS), outlined her expectations regarding mitigating the risks caused by the climate change crisis.

Apart from banks and insurance firms, it also concerns cryptocurrency businesses, which Lacewell urges to be more transparent about the exact location of their Bitcoin mining operations and mining equipment.

The proof of work (PoW) consensus algorithm that is used by Bitcoin, Ethereum and some other cryptocurrencies requires significant computational power to solve complex mathematical tasks and find new blocks.

The letter refers to numerous studies that have estimated the environmental impact of mining. According to one of them, the global CO2 emissions of Bitcoin equal that of the country of New Zealand.

The top cryptocurrency also produces more e-waste than Luxembourg, with 98 percent of ASICs expected to become obsolete.

Virtual currency firms should consider increasing transparency of the location and equipment used in bitcoin mining to help alleviate these concerns. It is also reported that the energy cost for mining virtual currencies is sizable compared to the value of the virtual currencies.

Related
NYDFS Chief Says Cryptocurrency Is “Very Important” as Alternative to Financial System
As 2020 is shaping up to be the year of corporate adoption, Lacewell warns that crypto firms could lose institutional clients if they do not pay heed to climate-related risks.

However, she also notes that mining firms are actively turning to sustainable energy resources:

There is data to suggest that some crypto miners are making advancements towards utilizing alternative and sustainable methods for energy production to mitigate this risk.

According to a September study published by the University of Cambridge, green energy accounts for 39 percent of Bitcoin's total hashrate, with North America using the widest range of resources.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.