Cryptocurrency mining is partially restricted in the law signed by the Governor of New York

New York is taking the country’s first step to catch the brakes on the spread of cryptocurrency mining, under legislation Gov. Kathy Hochul signed on Tuesday.

This action comes amid increased scrutiny of Cryptocurrency Industry after the collapse this month FTX exchange. But the New York measure, which passed the state legislature in June, is particularly concerned with the environmental aspects of cryptocurrency.

“I will ensure New York continues to be a hub for financial innovation, while also taking important steps to prioritize protecting our environment,” Hochul, a Democrat, said in a letter explaining her agreement.

The new law sets a two-year moratorium on new, renewable air permits for fossil-fuel power plants used to mine the energy-hungry “proof-of-work” cryptocurrency — a term for the mathematical process that records and secures transactions in bitcoin and similar forms of digital money. Proof-of-work is the blockchain-based algorithm used by Bitcoin and some other cryptocurrencies.

The law also requires the Department of Environmental Conservation to assess how cryptomining affects a country’s ability to meet its climate goals.

Environmentalists said New York is undermining these goals by allowing cryptocurrencies to operate its own natural gas-fired power plants.

Meanwhile, cryptocurrency advocates have argued that the measure would hinder New York’s economic development, appropriating cryptocurrency while not addressing the use of other fossil fuels.

Cryptocurrency mining requires specialized computers that consume large amounts of power. One study calculated that, as of November 2018, bitcoin’s annual electricity consumption was comparable to Hong Kong’s in 2019, according to the US Energy Information Administration.

Some miners are looking for ways to reduce their dependence on fossil fuels to produce the needed electricity.