Efforts to crack down on crypto’s pollution notched a big win yesterday when New York Governor Kathy Hochul signed a bill into law that presses pause on a particularly dirty form of crypto mining. The law imposes a two-year moratorium on any new permits for certain fossil fuel power plants seeking to mine crypto.
In one high-profile case, a struggling gas plant in New York’s Finger Lakes region overcame economic headwinds by mining Bitcoin. Environmental advocates hoped the moratorium would prevent any other gas or coal plants, which might have otherwise shuttered, from turning into crypto mines.
The moratorium is limited to crypto mining that uses the enormously energy-hungry process for validating transactions that Bitcoin employs, called proof-of-work. Bitcoin burns as much electricity annually as a small country because miners run specialized hardware around the clock to add blocks of verified transactions to the blockchain, earning new tokens in return.
“The first of its kind in the country and a key step for New York”
New York’s new law targets mining companies attempting to use gas and coal plants to power that process. It doesn’t regulate miners that use renewable energy nor blockchains like Ethereum that have turned to a less-polluting validation method. While the moratorium is in place, the law mandates that the state complete an environmental impact study on proof-of-work crypto mining in New York.
“[The legislation] is the first of its kind in the country and a key step for New York as we work to address the global climate crisis,” Hochul wrote in a memorandum yesterday.
Advocates who pushed for the legislation warned that if fossil fuel power plants turn into crypto mines, they would derail the state’s climate goals. The Finger Lakes power plant mining Bitcoin, called Greenidge Generating Station, also alarmed some residents with its noise and potential impact on the environment and tourism near Seneca Lake. State regulators denied Greenidge a renewed air permit earlier this year. But the plant can continue to mine Bitcoin as it challenges the decision. Since it’s already operating, Greenidge isn’t subject to the new moratorium.
Still, the new legislation is the latest blow to crypto’s worsening winter. New York quickly became a new hub for Bitcoin mining after China cracked down on the practice in 2021. Now, it’s looking like the residency could be brief. “Should the governor sign the bill, I think you would see a pretty swift exodus of any miners that aren’t almost solely reliant on renewable energy,” John Olsen, New York state lead for the industry group Blockchain Association, told The The Hamden Journal earlier this month.
“A pretty swift exodus of any miners that aren’t almost solely reliant on renewable energy”
The Blockchain Association spent some $225,000 on lobbying in Albany this year to try to defeat the bill Hochul just signed and promote alternative legislation. Members of the association also donated thousands of dollars to Hochul’s surprisingly tight campaign, which left some environmental advocates worried she might let the bill die. State legislators passed the bill back in June, and Hochul faced an end-of-the-year deadline to sign or veto it.
“Thank you, Governor Hochul, for setting a precedent for the rest of the country and staying true to New York’s climate law mandates,” Liz Moran, New York policy advocate for the nonprofit Earthjustice, said in a statement today. New York state passed a Climate Act in 2019 to slash its greenhouse gas emissions by at least 85 percent by 2050.