Bill to limit cryptocurrency mining passes New York Legislature

New York lawmakers have passed a landmark environmental measure designed to put the brakes on the spread of cryptocurrency mining operations that burn fossil fuels. Both supporters and opponents say the bill, approved by the state Senate early Friday, is the first of its kind in the US.

If it becomes law, it would establish a two-year moratorium on new and renewed air permits for fossil fuel power plants used for energy-intensive “proof-of-work” cryptocurrency mining. A term for one that records and secures transactions in bitcoin and similar digital money. Proof-of-Work is a blockchain-based algorithm used by bitcoin and some other cryptocurrencies.

Environmentalists are urging Sarkar Kathy Hochul to sign the law. They say the state is undercutting its long-term climate goals by allowing cryptomining operations to run its natural gas-burning power plants.

“We in New York cannot re-power fossil fuel power plants for private profit purposes, especially when we want to move away from fossil fuels completely,” said Liz Moran of EarthJustice.

He said dozens of fossil fuel plants in New York could potentially be converted into mining operations.

Cryptocurrency advocates complain that the measure leaves the industry outside without addressing the use of other fossil fuels. They argue that the law would stifle economic growth in New York while other states court the growing sector.

“The message from the bill and adopting that kind of policy is not good for the industry that could really go anywhere,” said John Olsson of The Blockchain Association, an industry group. “We are very hopeful that the governor realizes that the long-term benefits of adopting this industry and this technology far outweigh the potential pause on potential future emissions,” he said.

Democrat Hochul has said she wants to make sure any legislation balances economic and environmental concerns. Cryptocurrency mining requires specialized computers that consume huge amounts of energy. According to the US Energy Information Administration, a study calculated that as of November 2018, the annual electricity consumption of bitcoin was comparable to that of Hong Kong in 2019. Some miners are looking for ways to reduce their reliance on fossil fuels to produce the needed electricity.

A coalition of environmental groups is separately urging the Hochul administration to refuse air permit renewal for Greenidge Generation in the Finger Lakes, which also produces electricity for the state’s electricity grid. A decision may come at the end of the month.

The moratorium measure, if signed into law, will not affect pending applications, such as the one from Greenidge. The measure would also require the state’s Department of Environmental Protection to conduct an environmental impact assessment of how cryptomining affects the state’s ability to meet its climate goals. The bill passed the Assembly, the lower house of the Legislature, in April.

(with insight from Michael Hill)