The New York financial regulator has issued a letter to firms across the state, urging greater action on climate change’s financial risks. The New York Department of Financial Services has said that all companies, including those involved in digital currency and Bitcoin mining, should assess climate change risks and take steps in mitigation. The letter follows on from a similar document sent by the regulator to insurance companies across the state back in September.
The letter highlights financial risks due to climate change.
The letter specifically highlights risks from the reduced economic output in response to climate shocks, which it suggested could lead to asset devaluation, increased defaults, tighter lending criteria, and widespread financial losses. It also references flood risk and other direct harms to businesses and communities that could arise from climate change in the coming years. In particular, the regulator said cryptocurrency miners should be aware of the huge environmental impact of mining BTC, which it describes as “sizable” relative to the value of the token itself.
“The number one issue with crypto mining is its impact on climate.”
The comments chime with a similar warning from Heath Tarbert, Chairman of the Commodity Futures Trading Commission, who raised the alarm about the environmental impact of BTC: “There are issues with crypto mining, of course, so number one [is] environmental issues.” The regulator said that it expects all firms in receipt of the letter to assess the risks posed by climate change to their business and take steps immediately to reduce the likely direct and indirect impacts. Moving forward, the issue is likely to become an even more important part of compliance with the DFS currently “developing a strategy for integrating climate-related risks into its supervisory mandate.”
