The phrase “domino effect” has been around for a long time. The phrase depicts how one action triggers a chain of events. Now at least one crypto expert is using this phrase to refer to greater government regulation.
In the New York government, Governor Kathy Hochul signed a measure on Nov. 22 that puts a two-year moratorium on new cryptocurrency-mining permits for fossil-fuel power plants used for proof-of-work cryptocurrency mining.
A proof-of-work mining used by the most famous cryptocurrency, Bitcoin, that needs fast computers that consume a lot of energy. A proof-of-stake mechanism, on the other hand, takes less energy. And because of that, the Ethereum blockchain has recently started to adopt a proof-of-stake mining method.
According to The New York Times, Hochul, who was just elected to a full term, termed the measure “a critical step for New York as we attempt to confront the global climate problem.” The New York State Assembly approved the new law in April, and the State Senate approved the two-year moratorium on crypto mining in June.
And as we can understand, this decision hasn’t come from anywhere. The environmental effect of cryptocurrency has long been a source of anxiety for the U.S. government and people who are into the “environment-friendly” movement. According to a September White House report, the electricity use from digital assets leads to greenhouse gas emissions, extra pollution, and other local consequences depending on market policies and local electricity sources that led to these regulations.
Winston Ma, the managing partner of CloudTree Ventures, said that now that the measure has been passed into law, “it’s important to see if it will cause a domino effect across the country, which accounts for about 40 percent of all miners in the world.”
According to Ma, China’s cryptocurrency crackdown was fueled by clean energy initiatives from the government. And these initiatives resulted in China losing the title of “the world’s largest cryptocurrency mining country” to the United States last year.
Winston also noted that the October Ethereum merge is timely because cryptocurrencies are frequently criticized for their energy-intensive mining process. “Apparently, following the Ethereum merging, ETH is shifting from proof of work to proof of stake, which may potentially minimize energy use,” Ma explained. “In my opinion, the domino effect after the new law also will potentially drive more attention away from Bitcoin to ETH.”
However, the Blockchain Association criticized the new two-year law, writing on Twitter that it will drive cryptocurrency out of the state and towards countries with more beneficial environmental and emissions regulations and that this is a lose-lose scenario for everybody.
“The wise path is the practical path,” Blockchain Association claims. “Investigate the sector and take the lead on appropriate financial regulations. Do not extend it to other states or nations. Keep jobs in a state that is on the verge of a tech boom. Crypto is here to stay and views itself as a part of New York’s future.”
But what we will have in the future from these new regulations, no one knows. But we are sure that we will see it together soon.