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Landmark bill to limit cryptomining passes NY Legislature

ALBANY, N.Y. — A milestone environmental measure designed to tap the brakes on the spread of cryptocurrency mining operations burning fossil fuels in New York has passed the state Legislature.

The closely watched bill approved early Friday by the state Senate would establish a two-year moratorium on new and renewed air permits for fossil fuel power plants used for energy-intensive “proof-of-work” cryptomining. Proof-of-work is the blockchain-based algorithm used by bitcoin and some other cryptocurrencies.

The bill, which supporters say is the first of its kind, now goes to Democratic Gov. Kathy Hochul for consideration. The governor has said she want to make sure any legislation balances economic and environmental concerns.

Environmentalists who lobbied for the bill said natural gas-burning power plants being used for cryptomining operations threaten the state’s ability to meet is long-term climate goals.

“Governor Hochul signing this legislation sends a signal that New York state is serious about meeting its climate mandates. It shows us that we cannot be re-powering fossil fuel power plants for the purposes of private gain in New York, especially as we’re looking to move away from fossil fuels entirely,” said Liz Moran of Earthjustice.

Moran said there are potentially dozens of fossil fuel plants in New York that could be converted into mining operations.

Supporters of the cryptocurrency industry said the measure would crimp economic development in New York. The Blockchain Association, an industry group, said it would simply prompt mining operations to move to other states.

Cryptocurrency mining requires specialized computers that consume huge amounts of energy. One study calculated that as of November 2018, bitcoin’s annual electricity consumption was comparable to Hong Kong’s in 2019, according to the U.S. Energy Information Administration. Some miners are looking for ways to reduce their reliance on fossil fuels to produce the necessary electricity.

A coalition of environmental groups has separately been urging the Hochul administration to deny the air permit renewal for Greenidge Generation in the Finger Lakes, which also produces power for the state’s electricity grid. A decision could come at the end of the month.

This measure, if signed into law, would not affect pending applications like the one from Greenidge.

The measure also would require the state Department of Environmental Conservation to perform an environmental impact assessment on how cryptomining affect the state’s ability to meet its climate goals.

The bill passed the Assembly, the Legislature’s lower chamber, in April.


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Bill to limit cryptomining passes New York Legislature

ALBANY, N.Y. (AP) — A milestone measure that would tap the brakes on the spread of cryptocurrency mining operations burning fossil fuels in New York has passed the state Legislature.

The bill approved early Friday by the state Senate would establish a two-year moratorium on new and renewed air permits for fossil fuel power plants used for energy-intensive “proof-of-work” cryptomining. Proof-of-work is the blockchain-based algorithm used by bitcoin and some other cryptocurrencies.

The bill, touted by supporters as the first of its kind, now goes to Democratic Gov. Kathy Hochul for consideration.

Supporters of the cryptocurrency industry said the measure targeting fossil-fuel burning power plants would crimp economic development in New York.

Environmentalists who lobbied for the bill said natural gas-burning power plants being used for cryptomining operations threaten the state’s ability to meet is long-term climate goals.

“With this bill’s passage, the legislature has rightly said fossil fuel power plants can’t get a second life in New York just for private industry gain, which would fly on the face of the state’s climate mandates,” said Liz Moran of Earthjustice in a prepared statement.

Environmentalists estimate that there are 30 plants in New York that could be converted into mining operations.

A coalition of groups has separately been urging the Hochul administration to deny the air permit renewal for Greenidge Generation in the Finger Lakes, which also produces power for the state’s electricity grid. A decision could come at the end of the month.

The measure also would require the state Department of Environmental Conservation to perform an environmental impact assessment on how cryptomining affect the state’s ability to meet its climate goals.

The bill passed the Assembly, the Legislature’s lower chamber, in April.


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How Energy Guzzling Crypto Mining Is Bringing Power Plants Back To Life In Us

At a time when fossil fuel power plants are shutting down in favour of renewable energy, some plants in the US are getting a new lease of life to mine Bitcoin. Despite the known harmful impact on the environment, investors are pouring in money into reviving ageing fossil fuel plants.

The idled Greenidge power plant in upstate New York was bought by private equity firm Atlas Holdings and retasked to mine cryptocurrency, while the once-struggling Montana coal plant, slated to shut down in 2018, was acquired by Bitcoin mining company Marathon in late 2020 to get the power station’s electricity.

Energy guzzlers

One of the biggest environmental impacts of cryptocurrency is the electricity required for the mining process to create new digital coins. To ensure that the crypto operation is secure, these networks rely on solving hard computational problems. The puzzles become more difficult when the price of the Bitcoin is higher, thereby consuming more electricity. The harder the puzzles and higher the competition, the greater is the electricity usage.

According to the Cambridge Bitcoin Electricity Consumption Index, the current annual energy consumption of Bitcoins is 147.67 terawatt hour (or one trillion watts for one hour), which is more than the energy consumption of Norway and Ukraine, EcoWatch reported.

Thirst for electricity

The 115-megawatt coal-fired Hardin generating station in Montana had been struggling for years and was on the brink of closing down operations. In 2020, Marathon Digital Holdings, a Nasdaq-listed bitcoin mining company, partnered with Hardin’s owner to buy the power plant’s electricity. Marathon set up a data centre on 20 acres of land beside the Hardin facility with over 30,000 Antminer S19 units, a computer that specialises in mining Bitcoins, The Guardian reported.

Another controversial project that illustrates the impact of cryptocurrency on climate is the Greenidge power plant in upstate New York. The once-abandoned power plant was acquired by private equity firm Atlas Holdings in 2014 and converted into a natural gas unit. In 2020, a data centre for mining Bitcoin was set up using power from the Greenidge plant. In 2021, the company had 19 MW of mining capacity and planned to raise it to 85 MW by the end of 2022, The Wall Street Journal reported.

Environment impact

When the Hardin plant roared back to life, it spewed 187,000 tonnes of carbon dioxide into the atmosphere in the second quarter of 2021, over 5000 percent more than was the emissions expelled in the same period in the previous year.

In the third quarter, another 206,000 tonnes of carbon dioxide was emitted, as per the data from the Environmental Protection Agency.

“This isn’t helping old ladies from freezing to death, it’s to enrich a few people while destroying our climate for all of us,” The Guardian quoted Anne Hedges, co-director of the Montana Environmental Information Center, as saying.

As for the Greenidge power plant, the air pollution and water runoff are likely to damage the small community in the area which depends on fresh air and clean water for tourism, agriculture and fishing in the Finger Lakes, Yvonne Taylor, vice-president of the environmental non-profit Seneca Lake Guardian, was quoted as saying by WSJ.

While climate activists criticise the rejuvenation of these old plants, Bitcoin miners claim that even the use of washing machines consume more power than Bitcoin.

“I understand the desire for some people to point bitcoin mining as the big bad boy, but on a comparison with every other industry out there, it’s insignificant,” Fred Thiel, chief executive of Marathon, said in an interview.

 


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$320 million stolen from Wormhole, bridge linking solana and ethereum

The logo of cryptocurrency platform Solana.

Jakub Porzycki | NurPhoto via | Getty Images

One of the most popular bridges linking the ethereum and solana blockchains lost more than $320 million Wednesday afternoon in an apparent hack.

It is DeFi’s second-biggest exploit ever, just after the $600 million Poly Network crypto heist, and it is the largest attack to date on solana, a rival to ethereum that is increasingly gaining traction in the non-fungible token (NFT) and decentralized finance (DeFi) ecosystems.

Ethereum is the most used blockchain network, and it is a big player in the world of DeFi, in which programmable pieces of code known as smart contracts can replace middlemen like banks and lawyers in certain types of business transactions. A more recently introduced competitor, solana, is growing in popularity, because it is cheaper and faster to use than ethereum.

Crypto holders often do not operate exclusively within one blockchain ecosystem, so developers have built cross-chain bridges to let users send cryptocurrency from one chain to another.

Wormhole is a protocol that lets users move their tokens and NFTs between solana and ethereum.

Developers representing Wormhole confirmed the exploit on its Twitter account, saying that the network is “down for maintenance” while it looks into a “potential exploit.” The protocol’s official website is currently offline.

An analysis from blockchain cybersecurity firm CertiK shows that the attacker’s profits thus far are at least $251 million worth of ethereum, nearly $47 million in solana, and more than $4 million in USDC, a stablecoin pegged to the price of the U.S. dollar.

Bridges like Wormhole work by having two smart contracts — one on each chain, according to Auston Bunsen, co-founder of QuikNode, which provides blockchain infrastructure to developers and companies. In this case, there was one smart contract on solana and one on ethereum. A bridge like Wormhole takes an ethereum token, locks it into a contract on one chain, and then on the chain at the other side of the bridge, it issues a parallel token.

Preliminary analysis from CertiK shows that the attacker exploited a vulnerability on the solana side of the Wormhole bridge to create 120,000 so-called “wrapped” ethereum tokens for themselves. (Wrapped etherum tokens are pegged to the value of the original coin but are interoperable with other blockchains.) It appears that they then used these tokens to claim ethereum that was held on the ethereum side of the bridge.

Prior to the exploit, the bridge held a 1:1 ratio of ethereum to wrapped ethereum on the solana blockchain, “acting essentially as an escrow service,” according to CertiK.

“This exploit breaks the 1:1 peg, as there is now at least 93,750 less ETH held as collateral,” continued the report.

Wormhole says that ethereum will be added to the bridge “over the next hours” to ensure that its wrapped ethereum tokens remain backed, but it is unclear where it’s getting the funds to do this.

Ethereum founder Vitalik Buterin previously made the case that bridges won’t be around much longer in the crypto ecosystem, in part because there are “fundamental limits to the security of bridges that hop across multiple ‘zones of sovereignty.'”

CertiK noted in its post-mortem report of the incident that when bridges hold hundreds of millions of dollars of assets in escrow and multiply their possible vectors of attack by operating across two or more blockchains, they become prime targets for hackers.

Crypto platforms have faced a number of high-value exploits in recent months.

“The $320 million hack on Wormhole Bridge highlights the growing trend of attacks against blockchains protocols,” said CertiK co-founder Ronghui Gu. “This attack is sounding the alarms of growing concern around security on the blockchain.”




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