New York lawmakers have proposed a bill that would tax cryptocurrency mining operations, saying the industry’s high electricity use is driving up bills for residents and small businesses.
State Senator Liz Krueger and Assemblymember Anna Kelles introduced a new bill on October 1, known as Senate Bill S8518, that would charge mining firms based on the amount of power they consume each year. Revenue from the tax would go directly into the state’s Energy Affordability Programs, which assist households struggling to cover utility costs.
How the tax works?
The bill sets a tiered tax based on electricity consumption. Companies using between 2.25 and 5 million kilowatt-hours of electricity would pay 2 cents per kWh. Usage of 5 to 10 million kWh would be charged at 3 cents per kWh, while 10 to 20 million kWh would cost 4 cents per kWh.
The largest operations, using over 20 million kWh, would pay the steepest rate of 5 cents per kWh. It could also reach $1 million or more annually, depending on their overall energy consumption. If passed, the law would take effect in 2027.
Lawmakers cited research suggesting that Bitcoin mining has added roughly $79 million a year to household bills and $165 million to small businesses across New York.
In 2023, electricity costs varied across different users: households paid about 22.25 cents per kWh, commercial users 18.01 cents, and industrial users 6.87 cents. Facilities powered entirely by renewable energy and not connected to the state grid would be exempt.
Rising mining costs
The bill comes after the price of mining a single Bitcoin exceeded $70,000 this year, and fears that higher taxes will render huge-scale, grid-based mining unviable. The bill also stated in its justification that New Yorkers are forced to pay higher bills as a result of unregulated proof-of-work crypto mining, and get little to no benefits from it.
Bitcoin, Dogecoin, and other cryptocurrencies use proof-of-work, which depends on vast networks of always-on computers with high electricity consumption. It could lead to environmental impacts, including air pollution, water consumption, and e-waste.
Other industries, such as AI and high-performance computing, also require large amounts of energy, sometimes even more than Bitcoin mining.
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