New York State Senator Liz Krueger has introduced a bill to impose excise taxes on the energy used by cryptocurrency mining companies operating in the state. The proposed legislation aims to address the significant energy consumption of proof-of-work (PoW) crypto mining operations and provide relief to New Yorkers facing rising utility costs. Assemblymember Anna Kelles is also supporting the bill.

The bill introduces a tiered tax structure based on annual energy consumption:

• No tax for miners consuming 2.25 million kilowatt-hours (kWh) or less per year.
• 2 cents per kWh for miners consuming between 2.26 million and 5 million kWh annually.
• 3 cents per kWh for miners consuming between 5 million and 10 million kWh per year.
• 4 cents per kWh for miners using up to 20 million kWh per year.
• 5 cents per kWh for miners consuming over 20 million kWh per year.

The proposal includes an exemption for mining facilities that rely on 100% renewable energy sources and are not connected to an electric corporation's transmission and distribution facilities.

According to bill sponsors, revenue collected from the tax, estimated to be over $500 million annually, would be used to subsidize energy customers enrolled in New York State's Energy Affordability Programs. These programs aim to provide utility bill relief for low- and moderate-income households.

The introduction of this bill follows the expiration of a two-year moratorium on new fossil-fuel-powered crypto mining operations in New York State, which was signed by Governor Kathy Hochul in 2022 and expired in 2024. The moratorium had banned digital asset mining that required the use of fossil fuels.

Senator Krueger and Assemblymember Kelles argue that cryptocurrency mining corporations reap enormous profits while externalizing the costs of their operations onto communities, the climate, and New York families' utility bills. They say the bill ensures that energy-intensive facilities pay their fair share, preventing ratepayers from subsidizing pollution, grid expansion, and ecological damage.

The crypto mining industry, characterized by its competitive landscape and narrow profit margins, could face significant challenges due to the proposed energy tax. The added expense may drive miners reliant on grid electricity to relocate to jurisdictions with lower costs. Some believe this bill is another in a series of regulatory proposals from lawmakers in New York that disincentivize Bitcoin and crypto companies from establishing themselves in the state.