New York lawmakers propose taxing crypto miners based on their electricity usage

Senator Liz Krueger of New York and Assemblymember Anna Kelles have introduced legislation that would impose additional taxes on cryptocurrency miners for the power they consume in their operations.

At its core, the Senate Bill S8518 is framed around two key goals: tackling climate change and making energy more affordable. It suggests that the crypto miners’ taxes will be funneled to the state’s Energy Affordability programs that cut energy costs for low- and moderate-income New Yorkers.

Senator Kruger confirmed, “The bill ensures that the companies driving up New Yorkers’ electricity rates pay their fair share, while providing direct relief to families struggling with rising utility costs.”

This development follows New York City Mayor Eric Adams’ decision to end his reelection campaign Sunday evening, closing a term defined by controversy and his reputation as one of the nation’s most outspoken crypto-friendly leaders.

As earlier reported by Cryptopolitan throughout his tenure, the self-proclaimed “Bitcoin Mayor” made digital assets central to his brand—taking part of his salary in Bitcoin, pushing to scrap the city’s BitLicense rules, and championing New York as the “crypto capital” of the world. He also backed efforts to integrate blockchain into city functions, from education to record-keeping.

Miners using 100% clean energy will be exempt from the new taxes if approved

Kruger noted that cryptocurrency mining has pushed up electricity costs across New York by approximately $79 million per year for households and $165 million for small businesses, necessitating the bill. 

The draft proposes a tiered excise tax, exempting companies that use 2.25 million kWh or less annually, while charging 2 cents per kWh for those using between 2.26 million and 5 million kWh. Additionally, mining operations using 5 to 10 million kWh annually would be taxed at 3 cents per kWh, those consuming up to 20 million kWh at 4 cents, and facilities exceeding 20 million kWh at 5 cents per kWh. Nonetheless, the bill carves out an exemption for facilities using 100% renewable power.

However, only crypto miners are singled out in the bill, even though AI and other advanced computing already surpass Bitcoin mining in energy consumption. While the legislation doesn’t cover AI facilities, a press release acknowledged that the industry is growing rapidly and consuming increasing amounts of power. Unfortunately for the cryptocurrency mining industry, which already operates on thin margins, an added energy tax could squeeze profits further, forcing grid-dependent miners to relocate to states or countries with lower energy costs. 

Though Senator Kruger defended the bill, saying, “Cryptocurrency miners provide very little benefit to New York State or to the communities where they are located, but create significant costs and burdens on ratepayers, the electric grid, the local environment, and our shared climate. This bill will ensure that the costs of those negative impacts will no longer be foisted on everyone else.”

New York still has crypto businesses applying for a BitLicense

The bill’s introduction follows the lapse of the state’s two-year moratorium on fossil fuel–driven proof-of-work mining, which was enacted in 2022 by a 36–27 Senate vote and expired roughly a year ago. 

The moratorium had blocked new applications or permits for power plants that burn carbon-based fuels to supply behind-the-meter electricity for proof-of-work crypto mining. It marked the first attempt of a U.S. state to restrict the rights of private businesses to choose what they are allowed to dedicate computational resources towards. 

New York still requires any virtual currency business in the state to hold a BitLicense. While it may sound like a routine business permit, the process can take months or even years and cost more than $100,000, making it a significant barrier for startups and even established firms.

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