{"id":7732,"date":"2022-08-04T12:00:00","date_gmt":"2022-08-04T12:00:00","guid":{"rendered":"http:\/\/ci02a7d3a370002662"},"modified":"2025-10-01T12:21:35","modified_gmt":"2025-10-01T17:21:35","slug":"new-york-violates-bitcoin-mining-rights","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/new-york-violates-bitcoin-mining-rights","title":{"rendered":"New York\u2019s Proof-Of-Work Ban Violates Bitcoin Miners\u2019 Right To Free Speech"},"content":{"rendered":"
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This is an opinion editorial by Aaron Daniel, an appellate attorney and author of The Bitcoin Brief legal research newsletter.<\/em><\/p>\n

Introduction<\/h2>\n

New York\u2019s legislative assembly passed Bill No. A07389<\/a> on June 2, 2022, \u201cestablishing a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods<\/strong>,\u201d such as those used by Bitcoin, \u201cto validate blockchain transactions\u201d (hereinafter, the \u201cMoratorium\u201d). <\/p>\n

In other words, the Moratorium singles out for regulation one of many different types of cryptocurrency protocol consensus algorithms. And it singles out for regulation the users \u2014 \u201cminers\u201d or \u201cvalidators\u201d \u2014 of one specific type of algorithm.<\/p>\n

The Moratorium, if signed into law by the governor, will violate proof-of-work miners\u2019 rights to free speech under the First Amendment.<\/p>\n

This is because proof-of-work miners engage in protected speech by broadcasting blocks of data across a protocol\u2019s network. In fact, Bitcoin\u2019s pseudonymous creator, Satoshi Nakamoto, explained that proof-of-work miners are engaged in \u201cpublishing\u201d data for the world to see on an immutable, distributed \u201ctimestamp server.\u201d<\/a> The Moratorium singles out block publishers on proof-of-work protocols<\/a> for a financial burden not borne by block publishers of protocols using other consensus mechanisms. As this article will show, such content-based differentiation is unsustainable under the U.S. Supreme Court\u2019s First Amendment precedent.<\/p>\n

The Moratorium thus provides a well-tailored case study to demonstrate that proof-of-work miners, especially Bitcoin miners, are engaged in protected speech under the First Amendment. If such a precedent could, one day, be established, it would provide a strong defense for the proof-of-work mining industry (and Bitcoin itself) against burdensome regulations such as the Moratorium, or even outright bans.<\/p>\n

To be clear, the argument presented here is not that Bitcoin itself<\/em> is speech. While that argument can be made (as Justin Wales expertly demonstrated in his foundational law review article \u201cBitcoin is Speech: Notes Toward Developing Conceptual Contours Of Its Protection Under The First Amendment<\/a>,\u201d and as Allen Farrington identified in \u201cBitcoin is Venice<\/a>\u201d), that argument is unnecessarily broad for purposes of addressing the Moratorium. And, more fundamentally, we are too early for such a transformative argument. The judiciary is simply not conversant enough with the technological, economical, psychological and philosophical underpinnings of Bitcoin to render a well-reasoned decision on whether Bitcoin is speech. The time will come. But we will get there incrementally, as the judiciary learns and applies its growing knowledge to each case it considers and each precedent it creates about Bitcoin.<\/p>\n

So let\u2019s start that process here, with our first case study on Bitcoin as speech, in the narrow context of proof-of-work mining.<\/p>\n

This article first establishes that miners in a proof-of-work protocol are engaged in speech as contemplated by the First Amendment. We\u2019ll focus on Bitcoin as our example, because this is Bitcoin Magazine, and because of Bitcoin\u2019s overwhelming share of the proof-of-work market. Next, the article will examine how proof-of-work miner speech is burdened by the Moratorium. Finally, the article will analyze the Moratorium under the different levels of constitutional scrutiny implicated by it. <\/p>\n

Bitcoin Miners Publish Blocks Of Data To An Immutable, Shared Database<\/h2>\n

The Role Of Miners<\/h3>\n

To understand how Bitcoin miners are engaged in speech, one must understand what miners do, and how they do it.<\/p>\n

This requires first dispelling a common misconception about Bitcoin miners. A miner\u2019s primary job in the Bitcoin protocol is not<\/strong><\/em> to issue new bitcoin. Andreas Antonopoulos explains it best in \u201cThe Internet Of Money Volume Two<\/a>\u201d:<\/p>\n

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\u201cMining doesn\u2019t work to create bitcoin. That is not the purpose of mining; that is a side effect. The way I can prove it\u2019s a side effect is that one day, there will be no new bitcoin. But guess what? There will still be mining. Even after the last satoshi (the smallest unit of bitcoin) gets mined, mining continues. It must continue because its purpose is not to create bitcoin but to provide security, to provide validation of all of the transactions and blocks according to the consensus rules.<\/strong> Generating bitcoin is a side effect that currently serves as a mechanism of reward, creating game-theory incentives to make sure that the validation is done right.<\/strong> Once you understand that and you realize what we\u2019re paying for is security, it changes the perspective slightly.\u201d<\/p>\n<\/blockquote>\n

\u201cChanges the perspective,\u201d indeed. \u201cMiners\u201d aren\u2019t really miners at all. They are transaction validators. As Darin Feinstein has pointed out<\/a>, the term \u201cminer\u201d misrepresents the true nature of these nodes in the Bitcoin network: they are accountants auditing the ledger. The term \u201cminer\u201d conjures images of some type of dirty, industrial process of pulling resources out of the ground. That doesn\u2019t sound like speech.<\/p>\n

What does sound a lot like speech is Nakamoto\u2019s description of the auditing process in his white paper<\/a>, the foundational document they used to introduce and explain their creation. Nakamoto did not use the noun \u201cminer,\u201d but they did use the verb \u201cpublish<\/strong>.\u201d Explaining how Bitcoin solves the double-spend problem<\/a>, Nakamoto wrote:<\/p>\n

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\u201cThe solution we propose begins with a timestamp server. A timestamp server works by taking a hash of a block of items to be timestamped and widely publishing the hash<\/strong><\/em>, such as in a newspaper or Usenet post [2-5]. The timestamp proves that the data must have existed at the time, obviously, in order to get into the hash. Each timestamp includes the previous timestamp in its hash, forming a chain, with each additional timestamp reinforcing the ones before it.\u201d<\/p>\n<\/blockquote>\n

And, to \u201cimplement a distributed timestamp server on a peer-to-peer basis,\u201d Nakamoto implemented \u201ca proof-of-work system<\/strong><\/em> \u2026, rather than newspaper or Usenet posts,\u201d which democratized and decentralized the process of publishing blocks \u201cto record a public history of transactions\u201d on the time chain, or blockchain.<\/p>\n

In other words, the role of Bitcoin miners is to \u201cvalidate new transactions and record them on the global ledger<\/a>.\u201d Miners do this by aggregating together pending transactions that comply with the Bitcoin software\u2019s rules and including them in a candidate block that the mining node will publish to the blockchain if it wins the proof-of-work contest for that round.<\/p>\n

Proof-Of-Work Primer<\/h3>\n

Let\u2019s take a moment to examine how that proof-of-work contest functions, so we can better understand the data that miners are processing and writing to the ledger.<\/p>\n

First, a simple analogy: Miners compete to find a winning lottery ticket that grants them the ability to publish transactions to the blockchain. As Yan Pritzker wrote in \u201cInventing Bitcoin<\/a>\u201d:<\/p>\n

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\u201cThe concept behind Proof of Work is that you participate in a random process, similar to rolling a die. But instead of a six sided die, this one has about as many sides as there are atoms in the universe. In order to roll the die and generate lottery numbers, your computer must perform operations that cost you in terms of electricity.<\/p>\n

\u201cTo win the lottery, you must produce a number which is mathematically derived from the transactions you want to write to the ledger plus the value of the die you rolled. In order to find this winning number, you may have to roll this die billions, trillions, or quadrillions of times, burning thousands of dollars worth of energy. Since the process is based on randomness, it is possible for everyone to generate their own lottery tickets without a central authority using just a random number generating computer and a list of transactions they want to write to the ledger.\u201d<\/p>\n<\/blockquote>\n

Next, some details. To generate winning lottery numbers, miners use the SHA-256 hash function, or algorithm, as described by Pritzker:<\/p>\n

\n

\u201cThe algorithm for proof of work involves repeatedly hashing the header of the block and a random number with the SHA256 cryptographic algorithm until a solution matching a predetermined pattern emerges. The first miner to find such a solution wins the round of competition and publishes that block into the blockchain.\u201d<\/p>\n<\/blockquote>\n

Hash functions like SHA-256 take in data and produce a large, random number, called a hash. A hash is like a digital fingerprint, because \u201cthe output is deterministic: you always get the same output for the same input,\u201d and it is \u201cinfeasible to find two strings that hash to the same output,\u201d per Pritzker.<\/p>\n

<\/figure>\n

The SHA-256 proof-of-work function is also a one-way function, meaning it is impossible to derive the input given only the output. But it is also asymmetric: given the input, anyone can run the algorithm once and verify the output. Thus, while it takes a miner many tries, using substantial compute power and energy, to produce a winning hash, it only takes a fraction of a second to verify the winning hash by the rest of the network.<\/p>\n

To produce a hash for entry into the lottery, miners input the block header, plus a nonce<\/em>, a number used only once. If the output hash is smaller than the target number (set by the Bitcoin software), the miner wins the right to publish the block that round.<\/p>\n

<\/figure>\n

So there you have it, that\u2019s proof of work.<\/p>\n

Proof-Of-Work Miners Publish Facts And Opinions<\/h2>\n

With this background on proof of work in mind, we can now examine in detail the types of information miners publish. Data published in a winning block includes all pending transactions that fit within the block\u2019s space limitation, metadata and arbitrary data that the miners choose to include.<\/p>\n

Specifically, miners write the following data into blocks:<\/p>\n