“We need to better understand what’s going on and enforce the same environmental laws that we have against coal and gas plants that are largely used to benefit cryptocurrency operations,” Sierra Club staff attorney Megan Wachspress said in an interview.
The New York law is “a really important first step in getting this information and better understanding how cryptocurrency miners turn coal and gas into Bitcoin and what the implications are,” he said.
Environmental groups have pushed for a temporary moratorium on some cryptocurrency mining in New York over concerns that old fossil fuel plants would be brought back online or run computers to earn cryptocurrency — a process that uses an extraordinary amount of energy. They also warned that the industry itself may not comply with the state’s new climate law, which requires drastic cuts in emissions.
The law does not affect cryptocurrency mining, which uses power drawn from the electricity grid. Operations could continue at sites large and small in upstate New York, including a former aluminum plant in Massena near the Canadian border and a former coal plant in Somerset near Niagara Falls.
The partial ban comes at a time when upstate New York has become attractive to companies that mine digital currencies, including Bitcoin. The region has many former power stations and manufacturing sites with unused electrical infrastructure that attracts industry.
Some owners say the law will deter companies from coming to New York for fear of additional restrictions, leaving the industry with additional fees and revenue as the digital currency market collapsed following the bankruptcy of Bahamas-based cryptocurrency exchange FTX. uncertainty.
Foundry director of public policy Kyle Schneps said crypto businesses are already diverting their investments. According to him, the Rochester-based Bitcoin mining company has acquired two sites in other states and is focusing investments there.
“The prevailing sentiment in the cryptocurrency industry right now is that New York is willing to use its climate goals to arbitrarily exclude any industry that is politically expedient,” Schneps said.
“It’s unlikely that any cryptocurrency company, whether proof-of-work or proof-of-stake, is going to do business in New York under the current climate that isn’t already grandfathered in by New York’s single-crypto laws, so no one knows who might be on the chopping block. “
The moratorium bill exempted only two power plants that currently burn fossil fuels from operating cryptocurrency mining machines, carving out any power plants that have already submitted permit applications.
“The legislation has no impact on our operations and we continue to invest and create good jobs at our facility,” said David Fogel, CEO of Coinmint, which operates a 160-megawatt cryptocurrency mining facility in Massena.
One company has already been affected by the new law.
Blockfusion, which owns a now-defunct city-ordered cryptocurrency mining facility in Niagara Falls, lost its insurance coverage due to the statewide moratorium despite not being affected, CEO Alex Martini-LoManto said. He supported the moratorium, but said it should go further and prohibit any fossil fuel plants from coming back online for any reason. Blockfusion, when it was running, was primarily powered by hydroelectric power from the grid.
“It’s a lot of circus – media and politics, but very little impact,” Martini-LoManto said. “This does not change bitcoin mining in New York… it has no retroactive effect.”
Cryptocurrency industry groups are concerned about calls from environmental advocates to expand restrictions on the “proof-of-work” method that underpins Bitcoin and for other states to take similar steps. Miners are engaged in a global competition to solve the complex calculations that validate transactions for all payments. This approach is called “proof of work” and the more computing power a mining operation has, the more it can earn. And that means a thirst for electricity.
“In some ways, all of the industry’s concerns about this bill and the rhetoric around it were valid,” said John Olsen, Albany lobbyist for the Blockchain Association. “It’s not about the environmental impact of the job, it’s about energy use and whether it’s safe to have that energy for a particular operation.”
Greenidge, an old coal mine turned gas plant turned cryptocurrency mining site, continues to operate. The state Department of Environmental Protection denied renewal of the company’s basic air permit in June, but under state administrative law, the plant can continue to operate pending appeals. Greenidge is also seeking to renew its water permit.
In addition, the Fortistar gas plant near the residential area of North Tonawanda in Niagara County may continue to operate with cryptocurrency miners and storage vessel-like pods with fans on the outside. The facility, purchased by Toronto-based blockchain company Digihost, has a Title V air permit application pending with the provincial DEC. The application has not yet been considered incomplete by the agency.
No new application to operate a fossil fuel power plant for cryptocurrency mining will be approved by the DEC under the law.
The agency also has a big elevator pitch with a short timeline ahead. The legislation directs the DEC to finalize a “comprehensive environmental impact statement” by Nov. 22, considering a number of issues related to cryptocurrency mining, which uses the energy-intensive “proof-of-work” methodology that underpins Bitcoin.
That makes for a tight schedule, as the law requires DEC to hold 120 days of public comment and multiple statewide hearings on the draft document.
The law calls for the DEC to analyze the number of “proof-of-work” cryptocurrency mining sites in the state, the amount and sources of energy used, greenhouse gas emissions from operations, and any expected growth and potential impacts of mining expansion. The study will also consider water use and public health impacts.
The outcome and details of the final product of this process may lead to additional regulations for the industry from the state legislature. For example, a general environmental impact statement on hydraulic fracturing for natural gas was a key step toward New York’s 2014 ban on the practice — a first in the country at the time.
“We hope that the DEC will recommend a policy … and decide whether this particular approval practice will happen at all and if it is consistent with our climate goals,” Moran said of New York’s goal of reducing emissions by 85 percent. 1990 level by 2050.