New York Passes Bill Restricting Carbon-fueled Crypto Mining Operations

The proof-of-work moratorium may impact one upstate mine’s future growth

article-image

Blockworks exclusive Art by Axel Rangel

share

key takeaways

  • The moratorium prohibits any increase to carbon-powered mining operations in the state
  • Environmentalists praise the effort as a win for carbon-emission reduction but crypto industry advocates argue the measure will send digital-asset businesses to other states

The New York legislature has passed a hotly-debated bill that places a two-year ban on certain proof-of-work cryptocurrency mining operations that depend on carbon-based power.

The bill, which was most recently approved by the Senate after passing the state Assembly in April, now heads to Governor Kathy Hochul, who can sign it into law or veto the measure.

While environmentalists praise the effort as a win for carbon-emission reduction, crypto industry advocates argue the measure will make New York less attractive to digital-asset businesses.

“If signed into law, this legislation will have a significant chilling effect on crypto mining in the state, and threatens to send hundreds of good paying jobs to neighboring states,” said Kristin Smith, executive director of lobbying group the Blockchain Association. “Most importantly, it would place New York in the unique position of being the only state to enact a moratorium at a time when other states are either studying the industry or actively welcoming the economic development it creates.”

Bill sponsor Rep. Anna Kelles called the early-morning vote on Friday an “essential” step in combating the climate crisis. 

Kelles’ inspiration was a mine in Rochester, New York, that brought a retired power plant back into operation when it was converted to a bitcoin mine. 

Private-equity firm Atlas Holdings purchased Greenidge Generation in 2014 and converted the coal-fired power plant to natural gas. In 2021, the company started using the generated power to mine bitcoin.

“The intention of the bill is to prevent new mining operations that would draw power from fossil fuel generation, even if it’s partial,” John Olsen, the New York lead at Blockchain Association, said. “The impact, though, is really just economic in the sense that good paying jobs are going to be going to other states, and mining operations that would face less regulatory scrutiny, in terms of environmental impact, would be setting up shop [in another state.]”

One firm at the intersection of the energy industry and proof-of-work mining is HashWorks Digital Industries.

The firm, which mostly operates in the US but maintains relationships in Canada, was founded by energy industry veterans including co-founder Todd Esse, who spoke with Blockworks about the implications of New York’s moratorium.

Before jumping into Bitcoin, Esse spent 30 years in the energy space and built several merchant commodity desks, having worked at industry giants Sasco Energy and Sempra/AIG. He described the relationship between carbon-based energy sources and renewables as symbiotic. The grid still needs carbon-based generation, Esse said, and it’s unrealistic to think that carbon-based power plants can just be removed.

“The whole concept of a decentralized, transactional network supported by a proof-of-work platform can provide grid benefits — not just in response to demand. It actually provides the ability to develop green resources behind the meter.”

New York’s moratorium prohibits any increase to carbon-powered proof-of-work mining operations in the state. Esse noted that Atlas Mining’s Greenidge plant upstate could feel the Senate’s vote first-hand. 

Greenidge is not yet at capacity in terms of electricity consumption, as it currently operates with 19 megawatts of capacity, but its plans to increase to 85 megawatts by year-end may be disrupted if the bill becomes law.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million