Environmental Hazard or Economic Boon? Legislators Spar on Bitcoin Mining in New York

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.

Dueling Bills

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.

Legislative Debates

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.