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Hochul signs two-year crypto moratorium on fossil-fuel-based mining operations


ALBANY — Gov. Kathy Hochul approved a moratorium on what’s known as “proof-of-work” cryptocurrency mining, a measure that will be in effect for the next two years. State officials will use that time to study the overall effects of the process and whether it can be conducted in line with New York’s nascent climate laws.

Hochul, who signed the measure Tuesday evening, had remained quiet on the legislation in the months since it was passed by the Legislature — a period that coincided with her campaign for a full term. The moratorium was a cornerstone policy for environmentalists but was fiercely opposed by the business community and by her Republican opponent, U.S. Rep. Lee Zeldin. 

The debate over the legislation centered around whether New York should allow old fossil fuel-based plants to be brought back online and used to help power the intense computer processing needed to create the “blockchains” that cryptocurrency is made of.

Opponents of the moratorium said it would be a blow to the state’s efforts to be seen as friendly to the burgeoning crypto industry, and would cost at least some new jobs and tax revenue in upstate cities where the plants are located. Environmentalists said the benefit was not worth the detriment to the climate, especially in light of the state’s aggressive Climate Leadership and Community Protection Act of 2019.

“I will ensure New York continues to be the center of financial innovation, while also taking important steps to prioritize the protection of our environment,” Hochul said in a message that accompanied her approval of the moratorium.

The temporary ban on new state-issued air permits is limited to “proof-of-work” crypto mining, and allows for the numerous other types of production of the virtual currency. The ban also excludes facilities that use alternative types of energy such as hydropower, which Hochul said “would permit growth and business development in this industry.” 

There are only two such plants in operation now, one of which — Fortistar North Tonawanda — currently uses hydropower.

“As the first governor from upstate New York in nearly a century, I recognize the importance of creating economic opportunity in communities that have been left behind,” said Hochul, a Buffalo native. “This is why I will continue to invest in economic development projects that create the jobs of the future.”

Earthjustice, a leading environmental group that had pushed for the moratorium, celebrated the decision. “This first-in-the-nation law should set the standard for every other state where crypto miners are coming in, extracting resources, and wreaking havoc,” Liz Moran, a New York policy advocate for the group, said in a statement. 

Moran expects the state Department of Environmental Conservation’s mining review will “affirm what Earthjustice and the White House have already concluded: Cryptomining is a major threat to climate security and needs to be closely regulated.”

The Greenridge Generation plant in Seneca Lake, which remains online as it appeals the state’s June denial of its air permit, has faced fierce opposition from environmentalists. The plant’s backers have called allegations of potential damage from its operations overblown.

“Thank you, Gov. Hochul, for stepping up to protect New Yorkers from corporate bullies who want to exploit communities like mine in the Finger Lakes,” Yvonne Taylor of Seneca Lake Guardian said in a statement. “The crypto industry is going to whine that this is a blow, but it’s not.”

The Chamber of Digital Commerce, which represents digital asset mining companies, said in a statement it was “severely disappointed” by Hochul’s decision. “To date, no other industry in the state has been sidelined like this for its energy usage,” it said. “This is a dangerous precedent to set in determining who may or may not use power.”

Heather Briccetti Mulligan, president of the state Business Council, said the Legislature should not “seek to categorically limit the growth and expansion of any business or sector in New York. We plan to further engage and help educate them regarding this industry and the benefits it provides to the local, regional and state economy.”

Hochul’s decision to sign the legislation also comes shortly after the crypto industry has taken a major public hit following the implosion of the crypto exchange FTX amid allegations of gross mismanagement and the charge it was using investor deposits to prop up a sibling hedge fund, Alameda Research.

Other large players in the budding cryptocurrency field have plunged from the peak values of late 2021, prompting observers to predict a “crypto winter.” BitCoin, one of the best-known, was valued at $64,858 per coin a year ago. On Wednesday, it was trading for $16,668, according to the CoinDesk news site.

Rick Karlin contributed to this story.

Read More: Hochul signs two-year crypto moratorium on fossil-fuel-based mining operations

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