TORREY, NY – New York State legislators are proposing a new tax targeting energy-intensive cryptocurrency operations. State Senator Liz Kreuger (D-Manhattan, District 28) and Assemblywoman Anna Kelles (D-Ithaca, District 125) have jointly introduced legislation aimed at facilities that utilize proof-of-work mining, such as the Greenidge Generation plant located on Seneca Lake’s western shore in Torrey, Yates County.
In a public statement announcing the proposed bills, Kreuger and Kelles asserted the legislation will “guarantee that companies with massive electricity consumption, driving up utility rates for New Yorkers, contribute their fair share while providing direct financial relief to families facing increasing energy costs.”
According to the lawmakers, the proposed law seeks to ensure that these businesses absorb the real costs associated with their activities, rather than transferring them to consumers and local communities. This would be accomplished through an excise tax specifically levied on electricity used by digital currency mining that relies on proof-of-work validation, a process widely recognized as one of the most energy-demanding methods of cryptocurrency authentication.
The tax structure is designed as a progressive scale, meaning higher electricity consumption triggers a higher tax rate, ensuring that the largest facilities contribute more substantially. Under the proposed bills, mining operations consuming up to 2.25 million kilowatt-hours annually would be exempt from the tax. Electricity usage between 2.2 and 5 million kilowatt-hours would be taxed at a rate of 2 cents per kilowatt-hour. Facilities using 5 to 10 million kilowatt-hours would face a tax of 3 cents per kilowatt-hour. Operations consuming between 10 and 20 million kilowatt-hours per year would be taxed at 4 cents per kilowatt-hour, while consumption exceeding 20 million kilowatt-hours would be subject to the highest rate of 5 cents per kilowatt-hour.
The revenue generated by this excise tax would be channeled directly into existing New York State Energy Affordability programs. These programs are vital in providing support to low- and moderate-income households throughout the state, helping them manage their energy expenses.
Importantly, operations that are powered entirely by renewable energy sources and are not connected to the main power grid would be exempt from this tax. The Greenidge Generation plant currently uses natural gas to power turbines, which in turn generate electricity both for the grid and for the high-powered computers used in Bitcoin mining.
Kelles and Kreuger emphasized that the proposed excise tax offers a “sustainable, long-term policy that prevents the externalization of costs while promoting clean energy solutions and delivering ratepayer relief.” They estimate that the bill could generate more than $50 million annually for energy affordability programs managed by the state’s Department of Public Service, which offers income-eligible consumers a discount on their monthly energy bills.
Assemblywoman Kelles stated, “Cryptocurrency mining corporations accumulate significant profits while offloading the true costs of their operations onto our communities, our environment, and the utility bills of New York families. This bill ensures that the most energy-intensive facilities contribute their fair share, instead of forcing ratepayers to subsidize pollution, grid expansion, and ecological damage. By directing revenues into energy affordability programs, we are transforming a potential source of harm into a tool for relief, protecting households while upholding New York’s climate commitments.”
The state lawmakers cited information from the International Energy Agency, stating that the electricity consumption of data centers, artificial intelligence, and cryptocurrency sectors could potentially double by 2026. This could exceed 1,000 terawatt-hours, equivalent to the total electricity demand of Japan. In 2022, these sectors collectively accounted for approximately 2% of global electricity consumption, or 460 terawatt-hours, with cryptocurrency mining alone responsible for about a quarter of that total, roughly 110 terawatt-hours.
Research indicates that the establishment of cryptocurrency mining facilities leads to higher electricity bills statewide, resulting in an estimated $79 million annually in increased costs for individuals and $165 million for small businesses.
The lawmakers also raised concerns about the environmental impacts of these mining operations, including the use of freshwater to cool gas-powered plants, persistent noise pollution, electronic waste from mining equipment, and damage to lake water and aquatic life caused by the discharge of cooling water at elevated temperatures.
In 2022, New York State implemented a two-year moratorium on new fossil fuel-based proof-of-work mining operations. The goal was to allow the Department of Environmental Conservation (DEC) time to study the industry’s environmental and economic impacts. The resulting report conservatively estimated that emissions from currently operating facilities in the state could cause damages of approximately $10.6 billion between 2024 and 2050.
Dale Irwin, the Greenidge plant manager, responded to the proposed legislation, stating:
“We are a vital electricity producer for upstate New York, not a drain, and any objective assessment of our operation would demonstrate that we consistently supply power to the grid. The operation of our facility enhances the power supply to the grid and will continue to do so as the demand for power significantly increases in the coming years.”
Irwin added, “Greenidge and the leaders at the International Brotherhood of Electrical Workers (IBEW), who contribute to delivering this power daily, are playing an essential role in preventing utility prices from escalating even further in New York.”