On November 23, 2022, New York Governor Kathy Hochul signed legislation that imposes a two-year moratorium on certain crypto-mining operations that run on carbon-based power sources. The “Purpose or General Idea” portion of the legislation provides:
To establish a moratorium on air permit issuance and renewal for electric generating facilities that utilize a carbon-based fuel and that provides, in whole or in part, behind-the-meter electric energy consumed or utilized by cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; and require completion of a comprehensive generic environmental impact study of cryptocurrency mining operations using proof-of-work methodology in the State of New York in the context of the Climate Leadership and Community Protection Act (CLCPA) goals established in statute in 2019.
New York becomes the first state to impose such a ban. China banned crypto-mining in May 2021. In contrast, other U.S. states have adopted policies to attract crypto-mining.
The Governor acknowledged “the importance of creating economic opportunity in communities that have been left behind,” but that issue gave way to those who expressed that climate change was the greater concerns owing to the significant amounts of energy used in mining. The proof-of work method banned by the statute is used in connection with many cryptocurrencies, most notably Bitcoin.
The Chamber of Digital Commerce issued a Statement expressing its disappointment. It said:
To date, no other industry in the state has been sidelined like this for its energy usage. This is a dangerous precedent to set in determining who may or may not use power.
The [proof-of-work] mining industry has been spurring economic growth, job creation, and inclusion for historically underrepresented populations in New York, while also creating financial incentives for the buildout of renewable energy infrastructure. With this legislation becoming law, we expect the mining companies, or those considering business in the state, to leave and head to more friendly regulatory jurisdictions in the U.S. – a trend far too many industries in New York State are realizing daily.
The Chamber also noted that New York law already required that statewide greenhouse gas emissions be reduced 85% by 2050 and achieve net zero emissions in all sectors of the economy by that time. Proof-of work mining, it said, is actually a catalyst to achieve this goal because estimates are that the global mining industry’s sustainable electricity mix is 58.5% and growing. New York City Mayor Eric Adams, who is trying to make New York City a cryptocurrency hub, opposed the legislation, saying that such a ban would adversely affect New York’s economy.