NY passes US-first moratorium on reviving fossil fuel plants to mine crypto
New York’s state legislature approved a bill that would prevent fossil fuel power plants from being revived to power cryptocurrency mining operations. If signed by Gov. Kathy Hochul, the proposed law would prevent new permits from being issued for two years.
It’s a “first-in-the-nation cryptocurrency mining moratorium bill,” advocacy group Earthjustice said Friday. “While the bill would not cover fossil fuel burning crypto mining operations that have already applied for new or renewed air permits, it would ensure that any future facilities could not receive air permits for two years, while the State Department of Environmental Conservation conducts a thorough study on proof-of-work crypto mining,” the group said.
The bill’s prospects looked dim earlier this week but was passed by the state Senate in a 36-27 vote after 12 am on Friday morning. It was previously approved by the Assembly with a 95-52 vote in April.
“Despite the cryptocurrency industry spending millions lobbying against the bill and circulating misinformation, the legislation passed the Assembly with broad support,” the office of State Senator Kevin Parker (D-21) said last month in a press release that urged the Senate to take action. The bill’s goal is to pause “the dirty practice or refiring retired fossil fuel power plants for crypto mining,” the press release said.
By passing the new state law, “the legislature has rightly said fossil fuel power plants can’t get a second life in New York just for private industry gain, which would fly in the face of the state’s climate mandates,” said Earthjustice New York Policy Advocate Liz Moran.
Bill targets proof-of-work mining
The bill says that during the two-year moratorium, the state cannot approve any new air permit “for an electric generating facility that utilizes 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.”
The bill further says the state “shall not approve an application to renew an existing permit or issue a renewal permit… if the renewal application seeks to increase or will allow or result in an increase in the amount of electric energy consumed or utilized by” a proof-of-work cryptocurrency mining operation.
The bill also requires state agencies to prepare “a generic environmental impact statement on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions.” The review would examine the amount of electricity used by these operations, the types of fuel used, the impact on greenhouse gas emission reduction goals, other environmental impacts, and health impacts “due to reduced air and water quality in communities near cryptocurrency mining operations.”
Bitcoin uses the energy-intensive proof-of-work method. The Ethereum project intends to shift from proof-of-work to proof-of-stake as soon as August. As a post on the project’s website says, the proof-of-stake method “uses drastically less energy, and enables new scaling solutions to be implemented” but “is also more complex than proof-of-work and refining the mechanism has taken years of research and development. The challenge now is to implement PoS on the live Ethereum network—a process known as ‘The Merge.’“
Power plants revived for crypto mining
The New York bill addresses a problem we’ve covered before. In a May 2021 article about the Greenidge power plant in upstate New York, we wrote, “The once-abandoned power plant was bought by private equity firm Atlas Holdings and retasked. A significant portion of Greenidge’s electricity no longer powers nearby homes or businesses; rather, the plant’s smokestacks are increasingly pouring pollutants into the atmosphere in the service of mining bitcoin.”
Assemblymember Anna Kelles (D-125), who introduced the bill, was quoted in Parker’s press release as saying:
There are many ways to validate cryptocurrency transactions, none of which use anywhere near as much of our precious energy resources as proof-of-work cryptomining. We simply cannot let proof-of-work mining lead to an enormous energy consumption spike at a moment when climate scientists are collectively stating that we must reduce our total greenhouse gas emissions by 50 percent in the next eight years to avoid the worst impacts of climate change. This will require that we retire power plants that use fossil fuels as an energy source. We cannot afford to enable retired power plants to be brought back on line for private gain.
The press release also said the “legislation is specific to fossil fuel burning power plants used for crypto mining and will in no way affect the buying, selling, and trading of any cryptocurrencies, including those authenticated through proof-of-work.”
Industry hopes Hochul will veto bill
The Senate vote “came as leadership in the state capitol managed to flip some of the senators who were previously undecided,” CNBC wrote. Hochul will face pressure to veto the bill from industry groups such as the Chamber of Digital Commerce, which calls itself “the world’s leading trade association representing the digital asset and blockchain industry.”
“This is a significant setback for the state and will stifle its future as a leader in technology and global financial services,” group founder and President Perianne Boring told CNBC. “More importantly, this decision will eliminate critical union jobs and further disenfranchise financial access to the many underbanked populations living in the Empire State.”
Hochul became governor after Andrew Cuomo resigned in August 2021, and she is running for a full term in the 2022 gubernatorial election. Last month, Hochul received a $40,000 donation from Coinmint CEO Ashton Soniat, The New York Times reported. Coinmint “has a crypto-mining operation on the grounds of a former aluminum plant in Massena, NY, a small town northeast of Niagara Falls,” the Times noted.