All quiet on New York’s Bitcoin mining ban heading into governor’s election

A signature piece of environmental legislation remains unsigned heading into this week’s election for New York governor, despite sitting on Gov. Kathy Hochul’s desk for five months.

Climate experts fear that if the cryptocurrency mining moratorium is not signed by the governor soon, heavily polluting power plants that were once shuttered will go back online to produce digital money like Bitcoin. They also say they’re concerned the sector is at odds with the state’s Climate Leadership and Community Protection Act, given cryptocurrency speculation requires giant server farms and large amounts of power.

The unsigned legislation would put a two-year hold on issuing and renewing air permits for any crypto operation relying on fossil fuels, blocking speculators from acquiring abandoned energy facilities.

Such a maneuver led to Greenidge Generation, a formerly defunct coal plant on the Finger Lakes. Retrofitted with natural gas and reopened in 2014 solely for cryptomining, Greenidge has faced pushback from community and environmental groups.

“I’m looking at that bill closely,” Hochul said when asked during a gubernatorial debate on Oct. 25. “This has nothing to do with whether or not we embrace the cryptocurrency industry in our city.”

The moratorium wouldn’t shutter Greenidge, and the ban would remain until the state studies the cryptomining industry’s environmental impacts. In her response, Hochul mentioned that the state’s Department of Environmental Conservation shut down Greenidge earlier this year, though the company has still been operating — at an accelerated pace — pending an appeal.

Cryptocurrency industry proponents are convinced that this legislation will lead current and future business prospects to look elsewhere. They decry the bill as biased against the virtual currency sector, pointing out that no other U.S. state is considering such a ban, including California, which has the tightest emissions laws in the nation.

“Some [virtual currency companies have] already written New York off just based on the introductions of legislation like that,” said John Olsen, New York lead for the Blockchain Association. “It didn’t even have to rise to the level of being chaptered.”

Rep. Lee Zeldin, Hochul’s Republican challenger in the governor’s race, picked up this theme in their recent debate, describing the moratorium as anti-business.

“We shouldn’t be picking winners and losers in business,” Zeldin said during the debate while adding that he wouldn’t sign the moratorium.

But lawmakers insist the bill provides an opportunity to examine how cryptomining can grow, even as the state weans itself off fossil fuels.

“It flies against the face of all our climate goals that we set in New York,” said state Sen. Kevin Parker, who supports the cryptocurrency industry even as a sponsor of the moratorium bill. “We want to pause the process so we can understand the impact on climate change and greenhouse gasses and also figure out what is a sustainable way to do cryptomining.”

According to Assembly Member Anna Kelles, who also sponsored the bill, about 50 shuttered power plants are scattered across the state and are at risk of being purchased and converted into electricity sources for 24/7 cryptocurrency mining. These developments could increase the state’s greenhouse gas emissions significantly. These defunct power plants could create a total of 1,800 megawatts that could add 18 million metric tons of carbon dioxide and methane into the air, according to Cornell University engineering professor Anthony Ingraffea.

Alternatives exist for the cryptocurrency industry. Miners could also use renewable energy sources instead of fossil fuels. The second-most popular digital asset, after Bitcoin, is Ethereum, which recently switched out its traditional carbon-intensive method of solving algorithmic puzzles to make virtual coins — called proof-of-work. Its makers are now using proof-of-stake, which they and outsiders claim uses much less electricity. Instead of requiring miners to expend electricity to solve algorithms, the proof-of-stake allows users to validate transactions in exchange for earning a fee.

“Time is of the essence because [decommissioned power plants are] being purchased and turned on, and the noise, air and water pollution is directly felt by these communities,” said Kelles. “No one can say that this bill is anti-tech because data has come out that cryptocurrency mining doesn’t create a lot of jobs, and there are alternatives that are economically viable like proof-of-stake.”

Cryptocurrency mining consumes substantial amounts of electricity. The industry’s annual global energy usage, as of August 2022, is estimated to be up to 240 billion kilowatt-hours — an amount that exceeds the power used by countries such as Australia. Only about 40% of that comes from renewable sources, according to Cambridge University’s Global Crypto Asset Benchmarking Study.

Densely populated areas also have limited space for making power. There are only so many places for plants. That means allocating energy for cryptomining could make it more challenging to power other needs such as transportation and heat, said Joshua Rhodes, a fellow at Columbia University’s Center for Global Energy Policy.

“The draft plan that we put out last year from the Climate Action Council says we need to be reducing our use of natural gas statewide,” said Dr. Robert Howarth, Cornell University ecology professor and member of the Climate Action Council. “We’re moving away from using it for electricity production, but then if we’re gonna have growth in cryptocurrency using natural gas, it’s gonna just make it very difficult to reach the goals.”

The fear among crypto advocates is that any digital money business — not just miners — will be dissuaded by a moratorium that is singularly targeting the industry.

“I think down the road, cryptocurrency mining will probably start generating their own energy,” Olsen said. “What those look like and what fuel sources they use is totally dependent on how the states treat those industries and those companies.”

If signed by Hochul, the moratorium’s deliverables will include an environmental impact statement generated by the New York State Department of Environmental Conservation, which will give the public an opportunity to review and comment on the findings.

According to Katy Zielinski, a spokesperson for the governor, “Gov. Hochul is reviewing the legislation.”