New York’s crypto moratorium would leave most mining untouched. There is another reason why the industry is in full swing

For months, it’s been a game of “will she or won’t she?” Under pressure from both directions, Gov. Kathy Hochul has so far kept mum on whether she will sign one of the only notable climate laws to pass the New York legislature this year: a two-year moratorium on certain forms of cryptocurrency mining.

The moratorium landed at the top of lawmakers’ agendas this spring largely because of one company: Greenidge Generation, which revived a fossil fuel plant with long closing hours in the Finger Lakes for the sole purpose of mining Bitcoin. The bill would for two years prevent other companies from following Greenidge’s example and give a new power to a fossil fuel plant to mine crypto using the energy-intensive process known as “proof of work.”

It will not affect existing crypto mining operations – including Greenidge – nor will it block new operations that use any other form of power supply. Only two of New York’s dozen current operations are powered by fossil fuels, and all of the new projects awaiting approval to connect to the grid will largely use hydropower.

So why is the industry fighting so hard to block the bill? Crypto interests have framed it as a referendum on their future in New York, spending nearly $1 million on lobbying from January to August, including more than $200,000 this summer — after the bill passed the legislature — to press their case to the governor.

The answer may lie in a provision in the bill that has attracted less attention than the partial moratorium, but which may contain the seeds of a much broader intervention: a requirement for the state to carry out a thorough environmental assessment of the industry as a whole, analyzing its effects on water, public health, economy and, crucially, New York’s climate goals.

This analysis could lead to a deeper debate about crypto’s place in a state struggling to increase renewable energy. Just the four large-scale crypto data centers under development, New York Focus found, would use more than four times as much energy at full capacity as the state has added in renewable energy over the past decade.

Crypto companies see this “as the opening salvo in a continuous targeting of this industry,” said Kyle Schneps, director of public policy at Rochester-based Foundry Digital, which currently runs the world largest Bitcoin mining pool.

“Most people don’t dig into the nitty-gritty of the bills, and what people understand is that New York has a bitter relationship with Bitcoin,” Schneps said. “Anyone can be next in the spotlight.”

Representatives of the industry’s top lobbying association, the Blockchain Association, echoed this view. (The group spent $225,000 lobbying in Albany in the first eight months of this year, and its director, Kristin Smith, donated $5,000 to Hochul’s campaign in May, according to state records.)

“I think New York is at a tipping point,” said John Olsen, the group’s New York state director. If Hochul signs the bill, he said, it gives supporters a foothold to continue trying to pass legislation that would extend the moratorium, strengthen it. The end goal is really, I think, to eliminate crypto mining in the state.”

ASSEMBLY MEMBER ANNA KELLESthe moratorium’s main sponsor in that chamber, has strongly rejected this claim.

“I think that’s a ridiculous argument, because the bill is so narrow,” Kelles said. Instead of trying to chase the industry out, she said, it would instead create “a level playing field” in the industry, fighting a trend towards consolidation by excluding only the large companies that could afford to revive a power plant.

But the original version of the bill pointed in a more hostile direction, proposing a three-year moratorium on all Bitcoin mining. And Kelles remains concerned about the impact of mining beyond the potential fossil fuel operations targeted by the moratorium as enacted.

“I’m a little surprised at the lack of a balanced conversation [about] an industry that uses so much energy, she said. Kelles pointed to the massive amounts of renewable energy New York needs to build by 2040 to meet its climate goals, noting that adding “massive” demand from crypto mining could only add to the challenge.

ONE recent study of the New York Independent System Operator (NYISO), which manages the grid, found that New York’s total energy capacity will need to roughly triple over the next eighteen years while taking all fossil fuels—which account for more than two-thirds of the state’s current capacity — off-grid.

Increased power demand from the electrification of buildings, transport and other sectors is a key factor driving the need for the enormous expansion. But there is a lot of room for maneuver in how powerful our carbon-free future can be: NYISO estimates that online demand could increase anywhere from 10 percent to 60 percent by 2050. Staying on the low end of that projection would mean prioritizing energy efficiency—but also raise tough questions about reining in the most energy-intensive industries.

Many crypto critics are ready for that debate, including some not traditionally associated with the environmental movement.

“There is no public benefit to New Yorkers to use large amounts of our valuable energy resources to generate profits for a small number of wealthy private equity investors,” the influential health workers’ union 1199SEIU said in Aprilpushing back against some of it counterparties in work.

One of the crypto industry’s core arguments for expanding upstate is that the area has plenty of clean, cheap hydropower, which it can’t easily send downstate due to lack of transfer. Schneps, of Foundry, said the industry was ideally placed to harness this “stranded” energy.

But the New York Power Authority (NYPA), which generates the overwhelming share of the state’s hydropower, told New York Focus that it produces no surplus power: all the power it produces is sold, either to the public sector or to the broader market.

Crypto proponents further argue that mining can actually spur new renewable development, by giving wind and solar farms a lucrative outlet for excess energy they generate when the sun and wind are at their strongest. New York generated about 2 percent more wind energy than it was able to use last year, and that number is likely to rise over the next decade unless the state quickly upgrades its transmission, the NYISO warns.

But Anne Reynolds, executive director of the Alliance for Clean Energy NY, said she hasn’t heard of any renewable developers banking on crypto, noting that excess renewable energy above all points to a need for storage. (Her group, a coalition of renewable developers and green groups, has not taken a position on the moratorium.)

COLIN READ, AN economist at SUNY Plattsburgh, author of a new book about cryptoand former mayor of Plattsburgh, dismissed the industry’s green promises as “hogwash.”

“If the green power didn’t go to them, it would go to someone else,” he said. For example, it could be used to accelerate the state’s push to get fossil fuels out of buildings, he said — something New York is well behindaccording to the clean energy group RMI.

Crypto supporters, and even some skeptics, counter that politicians should not be in a position to pick winners and losers among industries, or decide what counts as a valid use of energy.

“It’s more of an ideological perspective than a practical one,” Olsen said.

Reynolds shares the industry’s concern that such an attack could backfire. “Crypto can be a little weird and lame and not create a lot of jobs, but the next thing, if we start on that path, it will be something that we actually want – some kind of high-tech industry or solar panel recycling, and it uses a lot of electricity, ” she said. “Don’t we want them to come to New York because of that?”

Read argues that the argument is not just political, but based on a hard accounting of Bitcoin’s costs and benefits to local communities. He compares the handful of jobs that mining brought to Plattsburgh to the 400 or so at a local plastics plant, which uses much less electricity. By his count, the factory generates about 90 jobs per megawatt of electricity it uses, compared to “one or two” for Bitcoin.

Read was mayor of Plattsburgh, the seat of Clinton County on the Quebec border, when New York got its first real taste of the Bitcoin rush. The city has some of them the country’s cheapest electricity prices, thanks in large part to the monthly allocation of NYPA hydropower. If it exceeds that quota, it must buy electricity on the open market, and prices rise accordingly. That’s what happened in the winter of 2018, when a combination of cold weather and crypto demand sent electricity bills soaring.

The state’s Public Service Commission (PSC) found that the two cryptominers were then operating in Plattsburgh increased household bills by $10 that January. The city responded by imposing one a year-long moratorium, while the PSC ruled that municipalities could charge crypto miners more for any excess power they used. Cryptocurrency mining has since resumed in Plattsburgh, on a smaller scale, and residents say they are still facing higher electricity bills as a result.

IN THE MEANTIME, CRYPTO COMPANIES has set up shop elsewhere around the state, showing little sign of packing up despite the threatened moratorium. NYISO records list four large-scale crypto data centers awaiting approval to connect to the Web, and another that was recently approved and is still in development.

Together, the five projects can consume almost 750 megawatts at full capacity. That’s nearly five times the renewable capacity New York has added in the past decade, according to NYISO, or six times the capacity of the state’s first offshore wind farm, which is expected to open late next year.

That’s in addition to about half a dozen smaller mining operations identified by the environmental group FracTracker Alliance and shared exclusively with New York Focus. The map provides a rare insight into the scope of an industry which the group describes as deliberately opaque.

The most ambitious mining operation is the Lake Mariner Data Center on the shores of Lake Ontario, which began mining operations in March and eventually aims to increase to 500 megawatt capacity. The owner, Maryland-based TeraWulf, did not respond to requests for comment by press time, but a recent press release noted that the company is on track to reach its milestone of 110 megawatts by the end of this year. Founder and CEO Paul Prager has touted the plant as immune to the moratorium, writes on Twitter“our model predicted policies and legislation like this.”

Prager’s bullishness provides a stark contrast to the crypto lobbyist’s claim that miners are already withdrawing from the state for fear of the moratorium. Pressed for evidence that miners have left, Olsen, of the Blockchain Association, said there was “nothing concrete” yet, but that “everyone is kind of holding their breath” for Hochul’s decision.

At this point, it probably won’t come until after the election, Kelles said. Crypto groups hope that when Hochul makes up her mind, she will instead sign one rival tuition bill which also passed the legislature this year. The bill would create a sixteen-member task force and give it two years to survey the industry’s effects on the state broadly – but it does not mention climate.

“The industry will do anything it can to prevent scrutiny,” said Karen Edelstein, eastern program coordinator at FracTracker. “We’ve seen it forever.”