NY Prohibition of Proof-of-Work Mining: Letter in Opposition

NY Prohibition of Proof-of-Work Mining: Letter in Opposition
Photo by Dylan Dehnert / Unsplash

On behalf of Black Bitcoin Billionaire’s 145,000 participating members across New York and the United States, we submit this memorandum in opposition to A.7389C / S.6486C. This bill seeks to establish a moratorium on cryptocurrency operations that use proof-of-work authentication methods to validate blockchain transactions. If enacted, the resulting effect would be costly to carbon sustainability efforts, promising career opportunities, low-income economic development, and Proof-of-Work based community-building projects.

Who we are

Black Bitcoin Billionaires is the most prominent Black-owned Bitcoin Advocacy Group in the United States. We provide financial literacy and business development pathways for communities traditionally overlooked by legacy financial institutions. Through our partnerships, we have created entrepreneurial, training, and career advancement pathways that change the financial trajectory of our members, many of whom reside in New York.

Our flagship Demo Day Event is a glimpse into the economic promise of how Proof-of-Work mining can empower underserved communities. Each quarter we invest $20K into the winning pitch of a Black-owned Blockchain business. Our recent winner, BTC Impact, is leading a project that installs S9 BTC miners into section 8 housing units to generate a revenue stream for housing departments and tenants, who then can use the proceeds to subsidize down payments or upgrades towards first-time homeownership. At scale, we begin to see the community development applications of Bitcoin mining and its ability to upskill Black and Brown New Yorkers, which may prove to be a key contributor towards closing existing wealth gaps.

Our representation is strong

University of Chicago survey reported that 44% of those who own cryptocurrency are people of color. Additionally, 30% of Black American investors own some form of cryptocurrency compared to only 18% of white investors. Black and Latinos on a percentage basis are leading the nation in cryptocurrency adoption by double digits. Our representation and perspective within the space should be considered more prominently in public discourse, especially as it pertains to legislating policy. We no longer accept becoming hidden figures in industries that we play a vital role in building. Maintaining an open regulatory cryptocurrency environment is becoming a higher priority voting issue for Black and Brown voters, as our stake and adoption in the Bitcoin protocol continues to excel past other demographics.

Equality of access and opportunity

Black and Brown investors, entrepreneurs, and professionals are gravitating to decentralized technologies en masse because the protocol in practice fulfills an unprecedented commitment to equal access and opportunity.  The egalitarian nature of decentralized platforms like Bitcoin highlight the ways in which centralized domains continually fail marginalized American communities. Centralization grants exorbitant privilege to a single actor which presents the nearly irresistible option to exploit, consolidate, and exclude access by arbitrary means. Few understand more empirically than people of color how such a system can be so unforgiving in its abuse. With a fairer alternative, many are electing to use financial instruments that allow access to wealth creation without needing permission from the subjective or discriminatory whims of any 3rd party.

Centrally controlled financial institutions hold a long documented history of conducting subprime loans, predatory interest rates, and higher denials for POCs in comparison to their white banking customers. Recently Wells Fargo rejected 47% of Black applicants in the 2021 Mortgage Refinancing Boom. While other lenders approved 71% of Black applicants. One story showcased an engineer, holding an 800+ credit score, married to a doctor, but was still somehow rejected. In contrast, fully decentralized networks operating on proof-of-work removes human bias and inefficiency from their operations. (Even the bias that exists where we tell ourselves there’s none). Proof-of-work systems run agnostic to any users’ identity, location, or beliefs, running on democratic consensus, incapable of granting any single user unequal privilege over another. A system that doesn’t depend on trusting the integrity of another individual in order to work is a system worth trusting. That is why POCs are flocking in droves. It is our first chance at a fair shot.

POW = Decentralization | POS = Centralization

For these reasons, Proof-of-work (POW) is crucial for maintaining the health and integrity of the mining industry and overall fair access to the protocol for any individual. Critics champion Proof-of-stake (POS) as an alternative that uses less energy to secure the blockchain; however, POS sacrifices equality of access and distribution, granting more decision-making control to users who hold more coins. Token markets can be cornered by an entity with deep pockets, allowing them to amass a majority of tokens. Effectively removing many People of Color from having a seat at the decision-making table. This leads us back to the same inefficiencies of centralization that we found necessary to opt-out of in the first place.

POW = One person, one vote. Distribution of wealth over time.

POS = S/he who holds the most coins makes the rules. The rich get richer.

Energy Usage

The Community Protection Act of 2019 pledges to reduce greenhouse gas emissions 85% by 2050, and net-zero emissions across all sectors. Critics believe if POW continues then the sustainability goals will not be met. However, the Crypto Climate Accord estimates have established a goal of net-zero emissions for the mining industry by 2040.

73% of Bitcoin mining today is already carbon neutral, and the speed of innovation happening in renewable mining is on a pace to beat the 2050 goals.

To keep in perspective the scale of Bitcoin’s total energy consumption, let’s look at some data. In 2020 the United States used 10,463 TWh of total energy. An additional 6,800 TWh worth of energy was wasted or lost through electrical grid inefficiencies. Only about 93 TWh worth of electricity was consumed by Bitcoin mining on the world’s electrical grid. That means Global Bitcoin mining consumes about 1.4% of the electrical energy that we waste yearly in the United States alone.

Black Bitcoin Billionaires is firmly opposed to A.7389C and supports conducting further studies, such as those proposed in A.7866, to ensure cryptocurrency mining continues in a sustainable way. In addition, keeping Proof-of-work authentication alive provides unprecedented business development, community-building programs, and access to life-changing careers for underserved communities across New York State.