With just seventeen days remaining in New York’s legislative session, legislators are weighing two competing proposals for regulating the state’s burgeoning cryptocurrency mining industry.
One bill, sponsored by Sen. Kevin Parker (D-Brooklyn) and Asm. Anna Kelles (D-Ithaca), would place a two-year moratorium on converting old fossil fuel power plants to energy-intensive “proof-of-work” cryptocurrency mines. Kelles and some environmental experts say that curtailing proof-of-work mining may be necessary if New York is to achieve its emission reduction targets to combat climate change.
The cryptocurrency industry has lobbied heavily against the proposed moratorium, instead throwing its support behind a competing proposal, sponsored by Sen. James Sanders (D-Queens) and Asm. Clyde Vanel (D-Queens), which would establish a task force to study the cryptocurrency industry — but would not create any restrictions in the meantime.
Both bills have passed the Assembly and are currently being considered by the Senate. On Wednesday morning, Vanel’s bill passed the Senate Banks Committee, with only Sen. Jabari Brisport (D-Brooklyn) voting in opposition.
Previously, Vanel’s bill passed the Assembly by a vote of 122-25, with the two dozen votes against coming mostly from Republicans who felt that the bill goes too far, and progressive Democrats who felt it doesn’t go far enough.
On Tuesday, Kelles’ bill passed the Assembly 91-56, with opposition coming mostly from Republicans and more moderate Democrats. Last year, the bill passed the state Senate 36-27, but must pass the upper chamber again this year to become law.
Supporters of the two bills have been engaged in pitched battle behind the scenes and on the floor of the legislature. Several legislators told New York Focus that Vanel has argued that Kelles’ bill would harm people of color, women, and low-income New Yorkers, though Vanel told New York Focus this was a “mischaracterization” of his views. The cryptocurrency industry lobby and some of Vanel’s co-sponsors have made similar arguments, claiming that Bitcoin is relatively accessible to marginalized communities often excluded from traditional financial institutions.
Kelles and supporters of her bill say these arguments don’t add up, since the bill does not impact individuals who own Bitcoin or who run boutique mining operations; it only relates to proposals to convert fossil fuel power plants to Bitcoin mines.
Last April, New York Focus reported that a once-shuttered coal plant in the Finger Lakes region, owned by Greenidge Generation, had fired back up again, converted to natural gas, and started mining Bitcoin — and that dozens of other plants could follow, posing a threat to the state’s greenhouse gas reduction goals.
Kelles and Parker’s bill takes aims at Bitcoin mining facilities like Greenidge that use the energy-intensive method of Bitcoin mining known as “proof-of-work.” The effort comes amidst growing concern with the environmental impact of Bitcoin mining, which uses nearly half a percent of all electricity consumed in the world.
Greenidge is currently seeking permits to continue its mining operations from state environmental regulators, who have twice delayed a decision on the company’s bid. Kelles’ and Parker’s bill would place a two year moratorium on those permits and on other similar efforts to convert old power plants to fossil fuel-powered bitcoin mines. The bill would not prohibit less energy-intensive forms of cryptocurrency generation, such as “proof-of-stake,” and would leave in place the permit regime for the more than a dozen proof-of-work mining operations that currently exist in New York.
During the moratorium, the state’s Department of Environmental Conservation would prepare a report on the environmental and public health impacts of proof-of-work cryptocurrency mining to be used as a guide for future legislation or regulation.
Sanders and Vanel’s bill, by contrast, would create a task force to study the cryptocurrency industry in New York, including its environmental impact. The sixteen-member body would include several government officials and at least one environmentalist, and would be required to submit a report by December 2024.
The cryptocurrency industry has mounted a fierce push against Kelles’ legislation, with multiple firms combining to spend hundreds of thousands of dollars lobbying legislators on the bill. In contrast, Vanel and Sanders’ bill is supported by representatives of the cryptocurrency industry. Lobbyists for the Blockchain Security Industry Coalition, a group claiming to represent cryptocurrency miners, developers, and users, wrote a memo currently circulating among legislators in support of Vanel’s bill and in opposition to Kelles’.
Kelles’ bill would “cause the State to artificially pick economic winners and losers,” the memo argues. It also cites cryptocurrency’s potential to help consumers avoid “high fees and transaction delays that especially burden low-income and disadvantaged communities.”
One of the memo’s three signatories, Thomas Faist, is a former chief counsel to Republican State Senator John Dunne. Faist’s recent major clients are the insurance industry, the chemical industry, and the cryptocurrency industry. Another, John Boltz, is a former Chamber of Commerce and tobacco industry lobbyist, whose recent major clients are the tobacco and cryptocurrency industries.
Boltz has contributed tens of thousands of dollars to Republican candidates for office in recent years, including U.S. House Minority Leader Kevin McCarthy, U.S. Senator Marco Rubio, and U.S. Senate candidates Kelly Loeffler and Martha McSally.
Vanel and supporters of his bill warn of potential severe economic consequences if Kelles’ bill becomes law.
Vanel told New York Focus that his primary objection to the bill is the effect the moratorium could have on the fast-moving economic opportunities created by proof-of-work cryptocurrency mining.
“One year, two years in this industry is like ten years in other industries,” he said. “To tell an industry to stop while we study — we don’t take that approach for any other industry,” he said.
The industry can be a source of high-paying jobs, Vanel said, noting that Greenidge has said that it employs 50 people at an average salary of $80,000 a year. “A good paying job, an average salary of $80,000 in rural New York — I thought that was a good thing,” he said.
Sanders, the bill’s lead senate sponsor, did not respond to a request for comment by press time, but Sen. Jeremy Cooney (D-Rochester), a co-sponsor in the Senate, said that the moratorium could have a severe effect on New York’s Bitcoin market.
“You can’t have cell phones in your pockets if you don’t have cell phone towers. You can’t have Bitcoin in New York if you don’t have people mining it to be able to use it and put it on the marketplace,” he said.
Kelles emphasized that her bill would not affect Bitcoin users. “A moratorium on cryptocurrency mining operations in power plants does not in any way have any effect on anyone’s ability within the state to buy, sell, use, or invest in any cryptocurrency, including those cryptocurrencies based on proof-of-work,” she said.
In discussions with other legislators, Vanel has been making an additional argument: that the Kelles/Parker bill would impede access to cryptocurrency for people of color, low-income New Yorkers and women, according to three Assemblymembers including Asm. Yuh-Line Niou (D-Manhattan), who supports Kelles’ bill. Niou argued that Kelles’ bill has “no connection” to these issues.
Vanel told New York Focus that these characterizations don’t accurately reflect his position.
“I want New York to be a place that has the best regulations in the world for cryptocurrency. That includes regulations around mining, that includes regulations around investors and investing,” he said, noting that he has recently introduced legislation to increase protections for cryptocurrency investors.
Cooney, whose district includes part of Rochester, did frame the issue in terms of racial equity. “I’ll speak to my own district: urban communities of color often don’t have access to financial institutions like banks or credit unions for a number of reasons. So if technology makes banking and saving and asset management more accessible, we need to be leaning into that rather than shutting that down,” he said.
Asm. Kenny Burgos (D-Bronx), who voted for both Kelles’ and Vanel’s bills and noted that he has cryptocurrency holdings, said that he’s not concerned about Kelles’ bill negatively impacting people of color.
“Most people of color that I know, including myself, don’t have an intention to buy and operate a power plant starting tomorrow,” in order to mine cryptocurrency, he said. “My understanding is that cryptocurrency will still be able to operate: buying, selling, and trading as normal.”
The task force that would be created by Vanel’s bill would be required to issue its results by the end of 2024. Kelles’ bill, by contrast, would require an environmental impact statement within a year.
A version of Vanel’s bill passed in 2018, and was signed into law in December of that year — but the task force was never set up and no action had been taken by the end of 2020, when the bill expired.
Vanel attributed that failure to the pandemic. “If COVID didn’t happen, this would not be an issue,” he said.
Despite his support of Vanel’s bill and opposition to Kelles’, Cooney expressed concerns about the timeline in Vanel’s bill. “A lot of these commissions that get set up take upwards of a year or two just to even get the members appointed,” he said.
Cooney noted that he also supports a different bill sponsored by Kelles and Parker that would authorize the state agency in charge of energy efficiency to study powering cryptocurrency mining with renewable energy. Since that bill assigns the task to an existing agency rather than a new task force, delays would be less likely, Cooney said.
An Obstacle to Climate Goals?
Environmental experts, including the Climate Action Council, the 22-member body in charge of outlining a plan for New York to achieve its climate targets, have highlighted cryptocurrency mining as a potential obstacle to those goals. New York’s flagship climate law requires the state to reduce greenhouse gas emissions by forty percent from 1990 levels by the year 2030 and to achieve a zero-emissions power sector by 2040.
According to a public draft of the Council’s report, cryptocurrency mining using fossil fuels “could make it more difficult to meet the Climate Act’s zero carbon electricity requirement by 2040.” The draft recommended that New York “develop policy responses needed to ensure that those industries do not interfere with meeting the statewide emission limits.”
Over two dozen old power plants could be converted to cryptocurrency mining facilities if regulators allow them to, the environmental advocacy group Earthjustice warned in a letter last April.
Fossil fuel-powered cryptocurrency mining like Greenidge “makes it much harder to reach the climate goals,” Climate Action Council member and Cornell University ecologist Robert Howarth told New York Focus.
“There are alternative approaches for crypto mining, and the advantages of these from an environmental standpoint are quite clear,” he added.
Asked whether cryptocurrency mining could be an obstacle to New York’s climate goals, Vanel said that it’s “unfair” to single out cryptocurrency as opposed to other energy-intensive industries. “Do you know how much energy our data centers take? We don’t shut those down,” he said.