current York May Crack Down On Crypto Mining
New York May Crack Down On Crypto Mining
The New York Assembly wants to stop cryptocurrency mining operations from setting up shop in the state’s shuttered power plants. Assembly member Anna Kelles has drafted legislation meant to pause crypto mining in the state, and reduce greenhouse gas emissions from the power-intensive industry.
Assembly Bill A7389C calls for an amendment of the state’s environmental conservation law to establish a moratorium on cryptocurrency mining operations that operate using proof-of-work authentication methods, which is widely used in crypto. It would also require that the New York Department of Environmental Conservation to study the environmental impacts of existing and proposed mining operations. The bill passed the state Assembly’s Environmental Conservation Committee in March 2022, and is now pending vote in the full state legislature.
If it passes, the bill will ban cryptocurrency mining operations based on proof-of-work in the state for a period of two years. Kelles says those moves are necessary to reduce pollution because when mining operations compete against each other to validate crypto transactions, they have to set up large facilities with high-powered computers; running these facilities requires a tremendous amount of energy, so many operations set up shop in old power plants. Crypto miners also try to get an edge by using the newest, fastest processors, which means they produce e-waste whenever they update their hardware.
Earther spoke with Assembly member Kelles about the bill and other environmental initiatives in the state. This interview has been edited and condensed for clarity.
Angely Mercado: Why is New York State such a useful location for crypto mining operations?
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Assembly member Anna Kelle: [Mining companies] are always looking for the cheapest source of electricity because they use so much of it, so ideally, they want cheap energy, cold temperatures and clean air… When computers get hotter, the less efficient they are, and you need to cool the facilities.
In upstate New York we have 30 retired power plants. New York has cold temperatures, abundant freshwater, and we have clean air. We also have a lot of hydroelectric energy, so companies went to where they can get hydro [power] for below market rate. One of the largest cryptocurrency mining operations in the country is in Massena. They took advantage of the low energy cost.
Greenidge [a mining facility along the Finger Lakes] is near fresh water because of the heat produced. It requires costly technology to cool, so they just use the water, circulate it around the facility to capture the heat, and then dump that back into the lake. They have a permit to pull up about 130 million gallons of water per day from the lake. They have a permit to release that water back in a class C trout stream at temperatures up to 108 degrees in the summer. Trout show signs of stress above 70 degrees Fahrenheit. It has a profound negative impact on the wildlife in the area, which is why fishermen and hunters in the area are very concerned.
What are other environmental concerns around crypto mining businesses in the state?
The greenhouse gas emissions. When Greenidge bought [the plant] and spun it back up… it was releasing zero admissions for years and now it’s maxing out its air permit for GHG emissions, which they could exceed depending on how many mining rigs they are putting in the facility.
There’s severe sound pollution. If you have all of them running all 24/7… it literally sounds like you’re standing on a tarmac with multiple jet engines blowing at you and the sound travels really far.
These cryptocurrency mining operations [often] spring up in low income communities because they offer PILOT pay in lieu of taxes… instead of just paying property taxes directly [to the city] on the assessed value of the company, they make a fixed payment for a set period of time, a certain amount every year, guaranteed. But oftentimes it is less than what they would pay if they just paid market rate.
For example, if you look at Greenwich, that facility, when it was a coal fire plant, paid just under a million dollars in their PILOT every year to the community. But if you look at the revenue of Greenwich-the last time I looked was in the third quarter of last year, when it had 7,500 computer processors, and now they have more than doubled that-they had a revenue of $40 million and yet they only paid a PILOT of about $150,000 to the community.
Upstate New York has about 30 retired power plants that could be targeted by other crypto mining companies. Are more companies trying to take advantage of that?
There is already an active proposal for the Fortistar power plant in North Tonawanda from a company from Canada… there have been announcements for other facilities too, that are open to a contract with cryptocurrency mining operations.
They might offset their energy usage by using hydroelectric power, but of course you have to look at the opportunity costs. If we are using our hydroelectric energy [for] cryptocurrency mining operations, that means we will have to significantly increase our new energy infrastructure, as well as our entire statewide transmission system, to meet the energy demands of our existing energy, let alone the significant increase from all of the cryptocurrency mining operations that are being added to the state.
Is there any concern that this bill could make the state’s elected officials appear to be anti-tech?
Well, no, it just isn’t true. New York state can be the crypto capital… [but] mining does not need to happen in New York State for them to continue to do exactly what they’re doing. Buying and selling and using cryptocurrencies can happen in this state, and prosper in the state, without allowing for mining. The moratorium is only on actual mining happening in New York.
Mining can still happen all over the world… [though] I wish that it wouldn’t. I would love to see all cryptocurrencies transition to a form of validation that doesn’t use as much energy.