New Legislation on Cryptocurrency Mining in New York
In a bold move to regulate the cryptocurrency sector, lawmakers in New York have introduced new legislation aimed at taxing proof-of-work mining operations based on their electricity usage. On Friday, Assembly Bill A9138 was brought before the New York State Assembly by Assemblywoman Anna Kelles and is now under review by the Ways & Means Committee. This bill is directly linked to Senate Bill S8518, which was presented earlier in the month by Senator Liz Krueger, who leads the Senate Finance Committee.
Tax Structure and Exemptions
Both pieces of legislation seek to implement a tax on crypto mining companies tied to their energy consumption, with the intention of ensuring these firms contribute to New York’s Energy Affordability Programs. Notably, mining operations that consume up to 2.25 million kilowatt-hours of electricity annually would be exempt from this excise tax. For those exceeding this threshold, the tax rates scale upwards, starting at 2 cents per kilowatt-hour for consumption between 2.25 million and 5 million kWh, and reaching up to 5 cents per kilowatt-hour for usage over 20 million kWh.
“The bill ensures that the companies driving up New Yorkers’ electricity rates pay their fair share, while providing direct relief to families struggling with rising utility costs,” Senator Krueger stated at the time of the Senate bill’s introduction.
A key feature of Assembly Bill A9138 is that mining facilities that utilize entirely renewable energy and operate off the grid will be exempt from the tax, incentivizing greener practices in the industry.
Revenue Allocation and Implementation Timeline
The revenue generated from these taxes, including any interest or fines, will be directed into energy affordability programs managed by the Department of Public Service, following consultations with the Energy Affordability Policy Working Group. If approved, the tax measures are set to take effect on January 1, 2027.
Industry Reactions and Comparisons
Both the Assembly and Senate versions of the bills are currently undergoing committee review. This legislative initiative draws parallels to similar actions in Northern Europe, where countries like Norway and Sweden have implemented stringent regulations that have effectively rendered cryptocurrency mining nonviable. Nic Puckrin, a crypto analyst and co-founder of The Coin Bureau, indicated that such regulatory environments often lead to mining operations relocating to states with more favorable conditions. He remarked,
“The irony is that moves like these don’t tend to lead to cleaner practices; they merely push mining operations out of state.”
When questioned about the likelihood of mining companies moving to more crypto-friendly jurisdictions, Puckrin confidently stated that it is the “obvious answer,” noting the practical benefits of relocating over conforming to strict regulations. With other states offering more accommodating atmospheres for cryptocurrency ventures, New York’s prospect of retaining these operations remains uncertain.
