Simply put
- Assembly Bill 9138, introduced in the New York State Assembly recently, proposes a tax for proof-of-work miners based on their electricity usage, ranging from 2 to 5 cents per kWh.
- A related bill, Senate Bill 8518, aims to direct the tax revenue towards New York City’s energy affordability program for those with lower to moderate incomes.
- Mining operations that use renewable energy or are off-grid will not be subjected to this tax, which is set to begin on January 1, 2027.
On Friday, New York state legislators took steps regarding cryptocurrency mining by presenting a bill that would impose significant taxes on miners, correlating with their electricity usage.
Assembly Bill A9138 was brought forth by Democratic Rep. Anna Kelles and has been sent to the Ways and Means Committee for review.
This legislation aims to impose an excise tax on power consumed by firms engaged in digital asset mining that adhere to a proof-of-work framework.
It complements Senate Bill S8518, which was introduced earlier in the month by state Senator Liz Krueger, who chairs the New York Senate Finance Committee.
Both pieces of legislation aim to ensure that crypto mining companies contribute to New York’s Energy Affordability Program based on their energy usage.
The proposal states there would be no tax for operations consuming up to 2.25 million kilowatt-hours each year.
If consumption exceeds this threshold and reaches over 2.25 million kWh, the tax would start at 2 cents per kWh, increasing to 3 cents for consumption over 5 million kWh, and 4 cents for over 10 million kWh, with a cap at 5 cents for those exceeding 20 million kWh.
Senator Krueger remarked that this bill would ensure that companies increasing electricity costs for New Yorkers are contributing fairly, while also offering relief to households facing higher utility expenses.
The provisions in A9138 indicate that mining facilities powered solely by renewable energy and operating off-grid will be exempt from taxation, an approach designed to encourage environmentally friendly practices within the crypto industry.
Taxes, interest, and penalties collected will fund the Energy Affordability Program, overseen by the Department of Public Services with input from the Energy Affordability Policy Working Group.
Make mining “infeasible”
If approved, the tax would start on January 1, 2027, and will apply to all future tax years. Both the Senate and House versions are currently under committee review.
This initiative mirrors actions taken by Nordic countries like Norway and Sweden, noted Nick Pucklin, a cryptocurrency analyst. He stated that while these measures weren’t outright bans, they effectively made mining operations untenable.
Pucklin further reflected that, “This could lead to similar outcomes here, where such regulations might not encourage greener practices, instead driving mining elsewhere.”
When asked whether mining operations might just shift to states more accommodating to crypto, Pucklin indicated that seemed like a “clear conclusion” since relocating is often easier and more cost-effective than attempting to comply with strict regulations, and there are still many states in the U.S. that are more friendly to crypto activities.
