The Chamber of Digital Commerce strongly opposes legislation introduced in New York –– NY S. 6486 and NY A. 7389 –– to establish a three-year ban on cryptocurrency mining. This legislation is harmful to the cryptocurrency mining industry. The ban pushes businesses out of the state, hurting jobs and revenue growth. And it freezes innovation –– in an area where the United States is already lagging behind other countries, such as China –– threatening our national security. It’s a significant concern, given the two trillion dollar market capitalization of cryptocurrency today, which is growing exponentially.
Background
Cryptocurrency mining is a mathematical process that confirms transactions on a blockchain and rewards miners with small amounts of cryptocurrency for performing these complex cryptographic calculations. This type of computing uses electricity, which has raised questions among some environmental activists and legislators. Research is still being conducted on how much electricity is used and how mining is powered. Some miners rely on hydro, wind, and solar power while others rely on electricity derived from natural gas and coal.
What is NY State’s Cryptocurrency Mining Ban?
On Monday, May 3, New York State Senator Kevin Parker, Chair of the Committee on Energy and Telecommunications, introduced a bill to establish a three-year ban on cryptocurrency mining. Companies can continue operations after the ban if they pass an examination by the NY State Department of Environmental Conservation (DEC). Assemblywoman Anna Kelles introduced a companion bill in the Assembly on Thursday, May 6. With the legislation making its way through both the Senate and the Assembly, the proposed punitive measures could pass and be sent to the Governor’s desk before the legislative session ends next month. June also happens to be the month when a large cryptocurrency mining company plans to expand its operations in New York, which has been met with resistance from environmental groups.
What is the Impact?
The proposed ban would require mining centers in New York to cease operations for three years. They may resume mining only after they’ve undergone a “generic environmental impact statement” (EIS) review conducted by the DEC. A generic EIS involves an examination of a site or project’s environmental impact. Findings from the EIS will determine whether a mining company is able to obtain permits needed to operate.
If a mining center is determined to be adversely impacting the State’s greenhouse gas emission targets based on the Climate Leadership and Community Protection Act of 2019, (which requires 40% carbon emissions reduction by 2030 and 85% by 2050), then the mining center cannot obtain permits needed to operate in the state and construct facilities.
A three-year ban in New York would devastate the mining industry in the Empire State, including, ironically, the operations of mining companies that are using renewable energy. And it would have broader consequences that would damage U.S. competitiveness in blockchain and cryptocurrency.
Not only would New York be deprived of the jobs and economic benefits that come from mining, the State would also be responsible for weakening the United States’ national security interests against other countries that are engaged in mining activity. The United States is competing against China, Canada, Russia, Kazakhstan, and Norway, whose governments and businesses have been capitalizing on mining activity. And a three-year gap could set U.S. competitiveness back potentially by a decade, given the breakneck speed of innovation in this sector.
Conclusion and Recommendations
The Chamber does not support legislation designed to stifle a growing industry and destroy lawful mining activity that creates good jobs and drives economic growth. Instead, we suggest that policymakers work together with the industry to incentivize the use of green, environmentally friendly technologies in this industry. Banning the mining industry only hurts New York’s and the United States’ competitive position in this industry globally. We would rather see New York become a center for innovation, including mining, and use of renewable energy sources can be a key component of that strategy.
For more information, please contact: policy@digitalchamber.org