On June 3, 2022, the New York State Legislature passed Assembly Bill A7389C that will establish a moratorium on proof-of-work cryptocurrency mining operations powered by energy generated from carbon-based fuels and require a comprehensive generic environmental impact statement review of such operations. Cryptocurrency mining operations are a growing industry in New York, but because the increasing energy usage associated with proof-of-work cryptocurrency mining operations impacts compliance with the Climate Leadership and Community Protection Act of 2019, which requires net zero emissions in all sectors of the New York economy and a statewide greenhouse gas emissions reduction of eighty-five percent by 2050, the Legislature desires to review their environmental impact.
The bill targets new and existing proof-of-work cryptocurrency mining operations that utilize behind-the-meter energy generated from carbon-based fuels by denying air permits for the power plants that generate the energy for these operations. Behind-the-meter refers to energy production that directly supplies energy to a facility instead of typical energy supply from the electric-grid.
The Moratorium. The bill provides for a two-year moratorium on air permit1 issuance for an energy generating facility that uses a carbon-based fuel to provide behind-the-meter energy to proof-of-work cryptocurrency mining operations. Additionally, there is a two-year moratorium for renewal applications for an existing permit if the application seeks to increase or will allow or result in an increase in the amount of energy used by a proof-of-work cryptocurrency mining operation. The moratorium does not apply to initial permit or renewal applications made prior to the effective date of the law. Additionally, the moratorium is limited to facilities that use carbon-based fuels to generate behind-the-meter energy, therefore, renewable energy facilities as well as cryptocurrency mining operations that utilize grid-supplied energy are unaffected.
The Environmental Impact Statement. In addition to the two-year moratorium, the bill requires the New York State Department of Environmental Conservation to issue a final generic environmental impact statement within one year of the effective date of the law and after a public comment and hearing period. The environmental impact statement will address, at a minimum: (i) the number and location of existing proof-of-work cryptocurrency mining operations; (ii) the amount of energy consumed by each operation; (iii) the source of energy consumed by each operation; (iv) the amount of greenhouse gas emissions and co-pollutants released by each source of energy to the operations; (v) the anticipated increase and expansion of such operations; (vi) the impact that the energy consumption of such operations has on the state’s ability to meet greenhouse gas emission reduction goals; (vii) the amount of water usage, water quality, and other ecological impacts of cooling water use by such operations; (viii) the potential public health impacts due to reduced air and water quality in communities near such operations; (ix) the potential statewide public health impacts from increased greenhouse gas emissions released by such operations; and (x) the social and economic costs and benefits of such operations.
1 Owners and operators of air contamination sources are required to obtain a permit or registration from the New York State Department of Environmental Conservation for the construction and operation of such sources. 6 CRR-NY 201-1.1. Therefore, the carbon-based fuel powered energy generation facilities that supply behind-the-meter energy to proof-of-work cryptocurrency mining operations require air permits for operation.
The bill does not take effect until delivered to and signed by Governor Kathy Hochul. If signed into law, the moratorium will take effect immediately and apply to all permits or renewal applications filed after such date. It will not affect permits or renewal applications currently under review and it will not affect cryptocurrency mining operations powered by renewable energy or grid-supplied energy.