Completely silent on New York’s Bitcoin mining ban heading into the gubernatorial election

A signature piece of environmental legislation remains unsigned heading into this week’s New York gubernatorial election, despite sitting on Gov. Kathy Hochul’s desk for five months.

Climate experts fear that if the cryptocurrency mining moratorium is not signed by the governor soon, heavily polluting power plants that were once shut down will come back online to produce digital money like Bitcoin. They also say they are concerned the sector is in violation of the state’s Climate Leadership and Community Protection Act, given cryptocurrency speculation requires giant server farms and large amounts of electricity.

The unsigned legislation would put a two-year hold on issuing and renewing air permits for any crypto operation that relies on fossil fuels, and block speculators from acquiring abandoned energy facilities.

One such maneuver led to Greenidge Generation, a previously decommissioned coal plant in the Finger Lakes. Retrofitted with natural gas and reopened in 2014 exclusively for crypto mining, Greenidge has faced backlash from local communities and environmental groups.

“I’m looking closely at that bill,” Hochul said when asked during an Oct. 25 gubernatorial debate. “This has nothing to do with whether or not we embrace the cryptocurrency industry in our city.”

The moratorium would not close Greenidge, and the ban will remain until the state studies the cryptomining industry’s environmental impacts. In her response, Hochul mentioned that the state Department of Environmental Protection shut down Greenidge earlier this year, although the company has continued to operate — at an accelerated pace — pending an appeal.

Supporters of the cryptocurrency industry are convinced that this legislation will lead current and future business prospects to look elsewhere. They dismiss the bill as biased against the virtual currency sector, pointing out that no other US state is considering such a ban, including California, which has the strictest emissions laws in the nation.

“Some [virtual currency companies have] already written off New York just based on introductions of such legislation,” said John Olsen, New York head of the Blockchain Association. “It didn’t even have to rise to the level of becoming the chapter.”

Rep. Lee Zeldin, Hochul’s Republican challenger in the governor’s race, raised this issue in his recent debate, describing the moratorium as anti-business.

“We shouldn’t pick winners and losers in business,” Zeldin said during the debate, adding that he would not sign the moratorium.

But lawmakers insist the bill provides an opportunity to examine how cryptomining can grow, even as the state weans itself from fossil fuels.

“It goes against all of our climate goals that we set in New York,” said state senator Kevin Parker, who supports the cryptocurrency industry himself as a sponsor of the moratorium bill. “We want to pause the process so that we can understand the impact on climate change and greenhouse gases and also figure out what is a sustainable way to do cryptomining.”

According to Assemblywoman Anna Kelles, who also sponsored the bill, about 50 closed power plants are scattered across the state and are at risk of being purchased and converted into power sources for 24/7 cryptocurrency mining. This development could significantly increase the state’s greenhouse gas emissions. These decommissioned power plants could create a total of 1,800 megawatts that could put 18 million tons of carbon dioxide and methane into the air, according to Cornell University engineering professor Anthony Ingraffea.

There are alternatives to the cryptocurrency industry. Miners can also use renewable energy sources instead of fossil fuels. The second most popular digital resource, after Bitcoin, is Ethereum, which recently swapped its traditional carbon-intensive method of solving algorithmic puzzles to create virtual coins – called proof-of-work. The manufacturers now use proof-of-stake, which they and outsiders claim uses much less power. Instead of requiring miners to spend electricity to solve algorithms, proof-of-stake allows users to validate transactions in exchange for earning a fee.

“Time is of the essence because [decommissioned power plants are] are being bought and turned on, and the noise, air and water pollution is felt directly by those communities, Kelles said. “Nobody can say this bill is anti-technology because data has come out that cryptocurrency mining doesn’t create many jobs, and there are alternatives that are economically viable as proof-of-stake.”

Cryptocurrency mining consumes significant amounts of electricity. The industry’s annual global energy use, as of August 2022, is estimated to be up to 240 billion kilowatt hours – an amount that exceeds the electricity used by countries such as Australia. Only around 40% of this comes from renewable sources, according to Cambridge University’s Global Crypto Asset Benchmarking Study.

Densely built-up areas also have limited space to create power. There are only so many places for plants. That means allocating energy to cryptomining could make it more challenging to power other needs like transportation and heat, said Joshua Rhodes, a fellow at Columbia University’s Center for Global Energy Policy.

“The draft plan that we put out last year from the Climate Action Council says we need to reduce the use of natural gas across the country,” said Dr. Robert Howarth, Cornell University ecology professor and member of the Climate Action Council. “We’re moving away from using it for electricity generation, but if we get cryptocurrency growth using natural gas, it’s just going to make it very difficult to meet the goals.”

The fear among crypto advocates is that any digital money business — not just miners — will be discouraged by a moratorium aimed at the industry.

“I think down the road, cryptocurrency mining will probably start generating its own energy,” Olsen said. “What they look like and what fuel sources they use is entirely dependent on how states treat these industries and companies.”

If signed by Hochul, the moratorium’s deliverables would include an environmental impact statement generated by the New York State Department of Environmental Conservation, which would give the public an opportunity to review and comment on the findings.

According to Katy Zielinski, a spokeswoman for the governor, “Gov. Hochul is reviewing the legislation.”