TORREY — State Sen. Liz Kreuger, D-28 of Manhattan, and Assemblywoman Anna Kelles, D-125 of Ithaca, have introduced bills to establish an excise tax on proof-of-work cryptocurrency mining facilities, such as the Greenidge Generation plant on the west shore of Seneca Lake in the Yates County town of Torrey.
The two legislators issued a news release announcing the bill introductions, claiming the bill “ensures that companies that consume massive amounts of electricity driving up New Yorkers’ electricity rates, pay their fair share while providing direct relief to families struggling with rising utility costs.”
They said the legislation requires companies to internalize the true costs of their operations, rather than shifting those burdens onto ratepayers and communities. It does this by establishing an excise tax on electricity used by digital asset mining operations that rely on proof-of-work validation, said to be the most energy intensive form of cryptocurrency authentication.
The tax is structured on a sliding scale based on electricity consumption, ensuring that the largest and most energy intensive facilities contribute proportionately more. Under the bills, mining operations consuming up to 2.25 million kilowatt hours annually would pay no tax, exempting small-scale operations. Usage between 2.2 and 5 million kilowatt hours would be taxed 2 cents per kilowatt hour. Facilities using 5 to 10 million kilowatt hours would be taxed at 3 cents per kilowatt hour. Those using between 10 and 20 million kilowatt hours annually would be taxed at 4 cents per kilowatt hour and consumption above 20 million kilowatt hours would face the highest rate of 5 cents per kilowatt hour.
Revenue generated by the excise tax would go directly into the existing New York’s Energy Affordability programs, which provide critical assistance to low to moderate income households across the state.
Operations that are powered by renewable energy and not connected to the grid are exempt. Greenidge uses natural gas as its power source to run turbines that, in turn, generate electricity for the grid and power large computers used in bitcoin manufacturing.
Kelles and Kreuger said the proposed excise tax provides a “durable, long term policy that prevents the externalization of costs while supporting clean energy and ratepayer relief. They said the bill is estimated to raise more than $50 million annually for energy affordability programs administered by the state Department of Public Service, which provides income-eligible consumers with a discount on their monthly energy bills.
“Cryptocurrency mining corporations reap enormous profits while externalizing the true costs of their operations onto our communities, our climate and New York families’ utility bills,” Kelles said. “This bill ensures that the most energy-intensive facilities pay their fair share, rather than forcing ratepayers to subsidize pollution, grid expansion and ecological damage. By directing revenues into energy affordability programs, we are turning a source of possible harm into a tool for relief, protecting households while upholding New York’s climate commitments.”
The two state lawmakers said that according to the International Energy Agency, electricity consumption from data centers, artificial intelligence and the cryptocurrency sectors could double by 2026, potentially exceeding 1,000 terawatt hours or the equivalent of Japan’s total electricity demand. In 2022, those sectors collectively accounted for about 2% of global electricity consumption or 460 terawatt hours, with cryptocurrency mining alone responsible for nearly a quarter of that total or roughly 110 terawatt hours.
They said research shows that the arrival of cryptocurrency mining facilities drive up electricity bills statewide, adding an estimated $79 million annually in costs for individuals and $165 million for small businesses.
The lawmakers also cited serious environmental concerns from the mining operations, including use of freshwater to cool re-powered gas plants, constant noise pollution, mining equipment electronic waste and damage to lake water and aquatic life by returning cooling water back at high temperatures.
In 2022, the state enacted a two-year moratorium on new fossil fuel based proof-of-work mining to allow the state DEC time to study the industry’s environmental and economic impacts. The report’s findings conservatively estimated that emissions from currently operating facilities in the state could impose damages of around $10.6 billion between 2024 and 2050.
Greenidge plant manager Dale Irwin responded to the proposed legislation.
“We are an essential electricity producer for upstate New York, not a drain, and any objective view of our operation would show that as we send power to the grid every single day,” he said. “Our facility being able to operate adds power supply to the grid and will continue to do so as the need for power only increases dramatically in the years ahead.”
Irwin added that “Greenidge and the leaders at the International Brotherhood of Electrical Workers (IBEW) who help deliver this power each day are playing an integral role in keeping utility prices from flying even higher than they already have in New York.”