ITHACA, N.Y.—Despite a flurry of lobbying from the cryptocurrency industry, New York has now become the first state to respond to energy-intensive forms of cryptocurrency mining using a moratorium.
Governor Kathy Hochul signed a bill that will enact a two-year ban on permitting fossil fuel-based power plants that are generating electricity for use in energy intensive forms of cryptocurrency mining in New York.
The bill, championed by Assemblymember Anna Kelles through the state legislature, is being applauded by environmentalists across the state and in the Finger Lakes, where the movement to raise the issue largely began.
Seneca Lake Guardian, the Sierra Club, and Earthjustice, and other environmental organizations have worked to bring attention to the issue since early 2021 when a natural gas-fired power plant on Seneca Lake, Greendige Generation, had begun to mine bitcoin with the energy it generated.
Since then, environmentalists have been urging Hochul to pass a version of the bill to get ahead of and stop the potentially large source of carbon emissions that would result from more power plants turning to cryptocurrency mining operations. That scenario, they argued, would go against New York staying on track to achieve the climate goals it adopted in 2019’s Climate Leadership and Community Protection (CLCPA), which committed the state to reaching an 85% reduction of state-wide greenhouse gas emissions by 2050.
Certain cryptocurrencies, most notably the poster child of the crypto world, Bitcoin, utilize an energy-intensive method to authenticate transactions known as proof-of-work, which is what the moratorium bill specifically targets. Functionally, the more popular bitcoin becomes and the more mining operations there are, proof-of-work authentication results in higher and higher energy demand to verify transactions and for bitcoin to be mined.
As a result, bitcoin miners have needed to increase the energy they use in order to run larger fleets of powerful computers and stay competitive. Crypto mining moved to the industrial level, utilizing power plants or other large scale sources of electricity to leverage their operations. In 2021, the energy consumption related to bitcoin surpassed the annual electricity consumed by the country of Pakistan.
The moratorium bill will also require the New York State Department of Environmental Conservation to develop a comprehensive impact statement on statewide cryptocurrency mining operations that utilize energy-intensive proof-of-work authentication methods. The statement will inform future regulations related to cryptocurrency mining.
The signing of the moratorium bill comes at a time when the cryptocurrency industry is in upheaval. The world’s second-largest crypto exchange platform, FTX, rapidly collapsed over the course of a few days earlier in November, and the value of the crypto market overall has contracted to under a third of the value it held just a year ago.
Amid all this, the crypto industry has, predictably, reacted with disapproval to the moratorium bill. After the news of Hochul signing the bill broke, the Chamber of Digital Commerce, a crypto-industry advocacy organization, tweeted a lengthy statement, writing, “With this legislation becoming law, we expect the mining companies, or those considering business in the state, to leave and head to more friendly regulatory jurisdictions in the U.S — a trend far too many industries in New York State are realizing daily.”
In a memo released with the signing of the moratorium bill, Hochul departs from the opaque stance she maintained on the issue of energy-intensive forms of cryptocurrency mining throughout the election season. She emphasized that the bill is a “key step for New York as we work to address the global climate crisis.”
Hochul also highlighted that the moratorium bill will not prevent large scale cryptocurrency operations from continuing to mine in the state if they utilize alternatives to fossil fuel-based energy. “As the first Governor from Upstate New York in nearly a century, I recognize the importance of creating economic opportunity in communities that have been left behind,” said Hochul.
In a statement, Assemblymember Kelles commended Hochul for demonstrating that she is a “climate champion” by signing the moratorium bill.
“We know that we must reduce our total global greenhouse gas emissions by 50% in the next seven years to avoid the worst impacts of climate change,” said Kelles. “Reactivating old retired power plants that use fossil fuels as an energy source is a move in the wrong direction and we cannot afford to go backwards.”