New Legislation Targets Crypto Mining’s Energy Costs in New York
A new bill introduced in Albany seeks to tackle the significant energy demands of cryptocurrency mining companies, aiming to alleviate the burden of rising utility costs faced by New Yorkers. This legislation, presented by Senator Liz Krueger and Assemblymember Anna Kelles, is particularly focused on large-scale proof-of-work (PoW) mining operations known for their substantial environmental impact.
The Essence of the Legislation
The proposed legislation would implement a sliding-scale excise tax specifically on large-scale PoW crypto mining facilities. Despite the technological allure of cryptocurrencies, these operations have garnered criticism for their energy consumption and environmental repercussions.
“To put it plainly, cryptocurrency mining corporations reap enormous profits while externalizing the true costs of their operations onto our communities, our climate, and New York families’ utility bills,” Kelles stated, emphasizing the need for these corporations to contribute more fairly to the state’s energy landscape.
Tax Structure Details
The tax would only apply to larger mining operations, and it’s structured as follows:
- Under 2.25 million kWh/year: No tax
- 2.25–5 million kWh: 2¢ per kWh
- 5–10 million kWh: 3¢ per kWh
- 10–20 million kWh: 4¢ per kWh
- Over 20 million kWh: 5¢ per kWh
Notably, facilities powered entirely by renewable energy and not connected to the main grid would be exempt from this tax.
Funding for Utility Relief Programs
One of the main goals of this legislation is to generate revenue—estimated at over $500 million annually. These funds would be directed towards the state’s Energy Affordability Programs, crucial initiatives designed to provide relief to low- and moderate-income households facing high utility costs.
Environmental and Economic Impact
The lawmakers championing this bill point out that the energy consumed by cryptomining data centers in New York rivals that of small cities. A 2022 study suggested that these operations could contribute to an increase in electricity costs by approximately $79 million annually for households and $165 million for small businesses across the state.
But the concern doesn’t stop at economic impact. Many of these mining facilities utilize repurposed fossil fuel plants, which heighten greenhouse gas emissions and draw significant amounts of freshwater for cooling processes. Additionally, they contribute to noise pollution and generate large volumes of electronic waste, often affecting vulnerable environmental justice communities disproportionately.
Addressing Past Legislative Moves
This bill arrives shortly after a now-expired 2022 moratorium on new fossil-fuel-powered crypto mining operations. Following an environmental review, it was estimated that existing facilities might incur $10.6 billion in damages between 2024 and 2050.
A Balanced Approach to Innovation and Responsibility
The lawmakers are presenting this initiative as a long-term solution that finds a balance between fostering innovation in cryptocurrency while aligning with climate goals and economic fairness. “By directing revenues into energy affordability programs,” Kelles added, “we are turning a source of harm into a tool for relief.”
This legislation not only addresses the immediate concerns surrounding energy consumption but also aims to create a sustainable framework for the future of cryptocurrency mining in New York, ensuring that it does not come at the expense of the environment or everyday New Yorkers.
