Establishes a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations shall be subject to a full generic environmental impact statement review.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7389C
SPONSOR: Kelles
 
TITLE OF BILL:
An act to amend the environmental conservation law, in relation to
establishing a moratorium on cryptocurrency mining operations that use
proof-of-work authentication methods to validate blockchain trans-
actions; and to require a comprehensive generic environmental impact
statement review
 
PURPOSE OR GENERAL IDEA OF BILL:
To establish a moratorium on cryptocurrency mining operations based on
proofof-work transaction authentication methods and require completion
of a comprehensive generic environmental impact study of cryptocurrency
mining operations using proof-of-work methodology in the State of New
York in the context of the Climate Leadership and Community Protection
Act (CLCPA) goals established in statute in 2019.
 
SUMMARY OF PROVISIONS:
Section 1 declares the legislative findings.
Section 2 places a two-year moratorium on air permit issuance- and
renewal for an electric generating facility that utilizes a carbon-based
fuel for cryptocurrency mining operations that use proof-of-work based
transaction validation methods.
Section 3 requires completion of a comprehensive generic environmental
impact statement by the New York State Department of Environmental
Conservation.
Section 4 requires one-hundred and twenty days of public comment on the
environmental impact statement and the holding of public hearings in
eight regions across the state prior to final issuance.
Section 5 requires issuance of a final generic environmental impact
statement after close of the public comment and public hearing period no
later than one year after the effective date of this act.
Section 6 provides definitions.
Section 7 provides the effective date.
 
JUSTIFICATION:
Block chain technology is an innovative technology that allows for the
recording and efficient transfer of information. The information in each
block is authenticated by users of the system in a transparent, decen-
tralized, and democratic manner. Each block has a unique identifier that
encodes the information of the block including code for the previous
information block from which the new information block was built creat-
ing a chain of information exchange known as a block chain.
Proof-of-Work is a unique methodology that has been used since 2009 to
create and authenticate new blocks on a block chain for cryptocurrency.
There are over 16 different methodologies of authenticating information
within a block. However, of these varied methods there is only one,
called Proof-of-Work that, by design, uses a substantial amount of
computational power to perform and thus uses a uniquely exorbitant
amount of energy. The Proof-of-Work authentication method was designed
to require individuals or companies to solve highly complex mathematical
equations in order to authenticate a transaction and earn valuable cred-
it. The more equations are solved by users the more complex the
equations get. By design, there is no software that can be created that
will be able to solve the equations better than brute force guesswork so
the only way to get an advantage and solve the equations faster is for
an individual or company to increase their computational power. This has
led to the expansion of large cryptocurrency mining operations consist-
ing of thousands of high power computers that run around the clock to
solve as many equations as possible and authenticate the most blocks.
There are an increasing number of cryptocurrency mining operations in
New York performing Proof-of-Work authentication of different block-
chains with some being built or modified to exclusively perform Proof-
of-Work authentications. Studies show that the magnitude of the computer
processing output required to authenticate a single block uses as much
energy as an average American household uses in a month. The annual
global energy use for PoW authentication is equivalent to that of the
country of Sweden and exceeds the energy consumption of all the global
activity of major tech companies like Amazon, Google, and Facebook
combined.
The added energy usage and corresponding increased greenhouse gas emis-
sions from these new cryptocurrency mining operations performing Proof-
of-Work authentications in New York could hinder or prevent compliance
with the critical state carbon emissions goals put in law in the Climate
Leadership and Community Protection Act of 2019. Under this law, state-
wide greenhouse gas emissions must be reduced eighty-five percent by
2050 and the state economy must have net zero emissions across all
sectors.
We must determine whether growth of the Proof-of-Work authentication
cryptocurrency mining industry is incompatible with our greenhouse gas
emission targets established in law, or has other significant detri-
mental impacts to our air, water, or public health. By requiring a
statewide generic environmental impact statement, this crucial informa-
tion about the industry's impact upon our climate law, and associated
water, air and wildlife impacts, will be understood and can guide any
potential future policy related to industry regulation.
Climate change threatens the health, welfare, and economy of the state
with increasingly severe and widespread impacts to our communities due
to flooding, sea level rise, heat waves, coastal erosion, erratic and
unpredictable weather patterns, shifting climatic zones, loss of wild-
life, increased harmful algal blooms and invasive species, and increased
risk of disease. These consequences disproportionately impact environ-
mental justice communities making the need for this comprehensive
assessment both an environmental issue as well as a social justice
issue. We must not go backwards on our commitment, in law, to prevent
these disastrous impacts to the residents of New York.
 
LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
NONE
 
EFFECTIVE DATE:
IMMEDIATELY
STATE OF NEW YORK
________________________________________________________________________
7389--C
2021-2022 Regular Sessions
IN ASSEMBLY
May 6, 2021
___________
Introduced by M. of A. KELLES, LUPARDO, ENGLEBRIGHT, THIELE, GLICK,
MAGNARELLI, EPSTEIN, BURDICK, STECK, J. D. RIVERA, CLARK, NIOU, FAHY,
WALLACE, BARRETT, CARROLL, L. ROSENTHAL, SEAWRIGHT, GALLAGHER, GONZA-
LEZ-ROJAS, BURKE, STIRPE, MAMDANI, SIMON, GRIFFIN, ANDERSON, McMAHON,
MITAYNES, OTIS, McDONALD, GOTTFRIED, GALEF, DINOWITZ, PRETLOW, PAULIN,
FORREST, ZINERMAN, SILLITTI, ZEBROWSKI, QUART, BURGOS, BICHOTTE HERME-
LYN, ABINANTI, JACOBSON, LAVINE, SAYEGH -- read once and referred to
the Committee on Banks -- reference changed to the Committee on Envi-
ronmental Conservation -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- again
reported from said committee with amendments, ordered reprinted as
amended and recommitted to said committee -- recommitted to the
Committee on Environmental Conservation in accordance with Assembly
Rule 3, sec. 2 -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the environmental conservation law, in relation to
establishing a moratorium on cryptocurrency mining operations that use
proof-of-work authentication methods to validate blockchain trans-
actions; and to require a comprehensive generic environmental impact
statement review
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings. The legislature hereby finds and
2 declares that:
3 (a) Climate change threatens the health, welfare, and economy of the
4 state with increasingly severe and widespread impacts to our communities
5 due to flooding, sea level rise, heat waves, coastal erosion, erratic
6 and unpredictable weather patterns, shifting climatic zones, loss of
7 wildlife, increased harmful algal blooms and invasive species, and
8 increased risk of disease, in part, which leads directly to loss of
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11081-19-2
A. 7389--C 2
1 life, property damage and reduction in value, ecological damage, and
2 increased infrastructure costs;
3 (b) It is the policy of the State of New York to conserve, improve and
4 protect its natural resources and environment and to prevent, abate and
5 control water, land and air pollution, in order to enhance the health,
6 safety and welfare of the people of the state and their overall economic
7 and social well-being;
8 (c) To mitigate the current and future effects of climate change, the
9 State of New York implemented the Climate Leadership and Community
10 Protection Act, requiring that statewide greenhouse gas emissions be
11 reduced eighty-five percent by 2050 and that the state has net zero
12 emissions in all sectors of the economy by that time;
13 (d) Cryptocurrency mining operations running proof-of-work authentica-
14 tion methods to validate blockchain transactions are an expanding indus-
15 try in the State of New York; and
16 (e) The continued and expanded operation of cryptocurrency mining
17 operations running proof-of-work authentication methods to validate
18 blockchain transactions will greatly increase the amount of energy usage
19 in the state of New York, and impact compliance with the Climate Leader-
20 ship and Community Protection Act.
21 § 2. The environmental conservation law is amended by adding a new
22 section 19-0331 to read as follows:
23 § 19-0331. Moratorium on air permit issuance and renewal.
24 1. For the period commencing on the effective date of this section and
25 ending two years after such date, the department, after consultation
26 with the department of public service, shall not approve a new applica-
27 tion for or issue a new permit pursuant to this article, or article
28 seventy of this chapter, for an electric generating facility that
29 utilizes a carbon-based fuel and that provides, in whole or in part,
30 behind-the-meter electric energy consumed or utilized by cryptocurrency
31 mining operations that use proof-of-work authentication methods to vali-
32 date blockchain transactions.
33 2. For the period commencing on the effective date of this section
34 and ending two years after such date, the department shall not approve
35 an application to renew an existing permit or issue a renewal permit
36 pursuant to this article for an electric generating facility that
37 utilizes a carbon-based fuel and that provides, in whole or in part,
38 behind-the-meter electric energy consumed or utilized by a cryptocurren-
39 cy mining operation that uses proof-of-work authentication methods to
40 validate blockchain transactions if the renewal application seeks to
41 increase or will allow or result in an increase in the amount of elec-
42 tric energy consumed or utilized by a cryptocurrency mining operation
43 that uses proof-of-work authentication methods to validate blockchain
44 transactions.
45 § 3. Generic environmental impact statement. (a) The department of
46 environmental conservation, in consultation with the department of
47 public service, shall prepare, pursuant to article eight of the environ-
48 mental conservation law, a generic environmental impact statement on
49 cryptocurrency mining operations that use proof-of-work authentication
50 methods to validate blockchain transactions.
51 (b) The generic environmental impact statement shall address, at a
52 minimum:
53 (i) the number and location of existing cryptocurrency mining oper-
54 ations that use proof-of-work authentication methods to validate block-
55 chain transactions in the state;
A. 7389--C 3
1 (ii) the amount of electric energy consumed by each cryptocurrency
2 mining operation that uses proof-of-work authentication methods to vali-
3 date blockchain transactions;
4 (iii) the sources of electric energy consumed by each cryptocurrency
5 mining operation that uses proof-of-work authentication methods to vali-
6 date blockchain transactions and the type of fuel used by each energy
7 source;
8 (iv) the amount of greenhouse gas emissions and co-pollutants released
9 by each energy source attributable to providing electric energy to cryp-
10 tocurrency mining operations that use proof-of-work authentication meth-
11 ods to validate blockchain transactions;
12 (v) the anticipated increase, if any, of cryptocurrency mining oper-
13 ations that use proof-of-work authentication methods to validate block-
14 chain transactions in the state and the anticipated expansion, if any,
15 of existing operations;
16 (vi) the potential impacts of electric energy consumption by crypto-
17 currency mining operations that use proof-of-work authentication methods
18 to validate blockchain transactions on the state's ability to meet the
19 greenhouse gas emission reduction goals set forth in article seventy-
20 five of the environmental conservation law;
21 (vii) the amount of water usage, water quality and other ecological
22 impacts, if any, of cooling water use by cryptocurrency mining oper-
23 ations that use proof-of-work authentication methods to validate block-
24 chain transactions;
25 (viii) the potential public health impacts, if any, due to reduced air
26 and water quality in communities near cryptocurrency mining operations
27 that use proof-of-work authentication methods to validate blockchain
28 transactions;
29 (ix) the potential statewide public health impacts, if any, from
30 increased greenhouse gas emissions released by cryptocurrency mining
31 operations that use proof-of-work authentication methods to validate
32 blockchain transactions; and
33 (x) the social and economic costs and benefits, if any, of cryptocur-
34 rency mining operations that use proof-of-work authentication methods to
35 validate blockchain transactions.
36 § 4. Any generic environmental impact statement draft shall be posted
37 on the department of environmental conservation's website and be subject
38 to 120 days of public comment from the date of issuance. The department
39 of environmental conservation shall conduct at least one public hearing
40 in each of the following regions of the state: western New York, the
41 finger lakes, the southern tier, central New York, the Mohawk valley,
42 the north country, the capital region/Hudson valley, and the City of New
43 York/Long Island, as defined by the Empire State Development Corpo-
44 ration, and provide meaningful opportunity for comment.
45 § 5. The department shall issue a final generic environmental impact
46 statement after close of the public comment and public hearing period
47 and no later than one year after the effective date of this act.
48 § 6. For the purposes of this act:
49 (a) "Cryptocurrency mining operations that use proof-of-work authenti-
50 cation methods" shall mean the use of a consensus algorithm in a block-
51 chain network used to confirm and produce new blocks to the chain to
52 validate a cryptocurrency transaction, where competitors complete new
53 blocks and where the algorithm changes the complexity of the competition
54 in a manner that is designed to and/or results in increased energy usage
55 for each competitor when the complexity is increased; and
A. 7389--C 4
1 (b) "blockchain" shall mean a digital ledger in which transactions are
2 recorded chronologically and publicly.
3 § 7. This act shall take effect immediately and shall apply to all
4 permits or renewal applications filed after such date.