New York Assembly Passes Anti-Mining Bill – Fin Tech

On April 26, 2022, the New York Assembly passed a bill that would place a two-year moratorium on
certain cryptocurrency mining operations that use proof-of-work
authentication (POW) methods to validate blockchain transactions
(e.g., Bitcoin). The theory underlying the bill is that continuing
expansion of “cryptocurrency mining operations running
proof-of-work authentication methods to validate blockchain
transactions will . . . impact compliance with the Climate
Leadership and Community Protection Act,” which requires New
York to substantially reduce greenhouse gas emissions.

Limited Impact of Moratorium on Mining in New York

Some reports describe this bill as an outright ban on POW mining
operations in New York. That is incorrect. The bill is far more
limited in scope. First, the bill would prohibit the issuance of
new air permits and the renewing of existing air permits. The bill
would not affect presently operating POW mining operations whose
air permits need not be reviewed within the moratorium period (air
permits can be issued for up to five years). Second, new and
renewal permits would be prohibited only for “an electric
generating facility that utilizes a carbon-based fuel.” That
means that mining operations using POW are unaffected if they use
alternative energies, such as wind, solar, hydroelectric, or other
renewable energy sources.

Although the bill does not create a prohibition on mining, as
some believe it will, it could potentially do serious and lasting
damage to New York’s mining industry. Assemblymember Anna
Kelles drafted the bill in question in response to a private equity
firm converting a defunct coal-fired power plant to operate using
natural gas and then using the power generated to mine
cryptocurrency. Mining operations may be hesitant to invest
substantial capital into New York if they fear having their
operations shut down at any time due to changes in New York’s
regulatory landscape.

Assessment of Environmental Impact of Mining in New York

The bill also calls for the New York State Department of
Environmental Conservation, in consultation with the New York State
Department of Public Service, to prepare a generic environmental
impact statement on cryptocurrency mining operations using POW. The
statement would address, at a minimum, in New York:

1. The number and location of existing cryptocurrency mining
   operations that use POW.




2. The amount of electric energy consumed by each cryptocurrency
   mining operation that uses POW.




3. The sources of electric energy and types of fuel consumed to
   power each cryptocurrency mining operation that uses POW.




4. The amount of greenhouse gas emissions and co-pollutants
   released as a result of cryptocurrency mining operations that use
   POW.




5. The anticipated increase in number or expansion of any
   cryptocurrency mining operations that use POW.




6. The potential impacts of electric energy consumption by
   cryptocurrency mining operations that use POW on New York’s
   ability to meet its greenhouse gas emission reduction goals.




7. The amount of water usage, water quality, and other ecological
   impacts of cryptocurrency mining operations that use POW.




8. The potential public health impacts on communities near
   cryptocurrency mining operations that use POW.




9. The potential statewide public health impacts of increased
   greenhouse gas emissions due to cryptocurrency mining operations
   that use POW.




10. The social and economic costs and benefits of cryptocurrency
    mining operations that use POW.

It remains to be seen how the responsible departments would
attempt to accurately assess certain of the above categories of
information. But if this environmental impact statement is
prepared, its methodology and findings could provide valuable
insight into how receptive those departments will be to the mining
industry in New York. It could also become a template for how other
states examine their own support for mining.

The bill still needs to be considered by the New York State
Senate.

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