Lawmakers in New York are proposing a tax on Bitcoin miners, arguing that their substantial electricity consumption is contributing to increased costs for everyday consumers as the basis for a new legislative measure.
On Wednesday, Democratic Senator Liz Krueger and Assemblymember Anna Kelles unveiled a bill aiming to levy an excise tax on proof-of-work crypto mining operations.
Senate Bill S8518 seeks to require mining companies to contributeābased on the amount of energy they utilizeāto New York’s Energy Affordability Programs, which aim to support low to moderate income families throughout the state.
According to Senator Krueger, “The bill guarantees that the companies causing higher electricity costs for New Yorkers contribute their fair share, while providing immediate assistance to families facing escalating utility expenses.”
The statement also noted that studies have indicated that the influx of crypto mining operations “increases electricity bills across the state, imposing an estimated additional $79 million on individuals and $165 million on small businesses annually.”
Senate Bill S8518 outlines that miners consuming between 2.25 and 5 million kilowatt-hours would incur a tax of 2 cents per kWh. Operations using between 5 and 10 million kWh would be charged 3 cents, while those consuming between 10 and 20 million kWh would face a rate of 4 cents per kWh. Any consumption exceeding 20 million kWh would be taxed at 5 cents per kWh.
However, mining operations that utilize renewable energy sources would be exempt from this tax, as the bill aims to promote “innovation and sustainability within the digital asset industry.”
To validate transactions on proof-of-work cryptocurrencies such as Bitcoin and Dogecoin, private companies usually operate data centers comprising high-cost computers that consume significant amounts of electricity. Critics of crypto frequently highlight the environmental damage associated with digital currencies.
Despite this, the energy consumption of the artificial intelligence sector and high-performance computing exceeds that of Bitcoin mining. While the new bill does not address AI data centers specifically, a press release acknowledged the growing energy demands of this industry.
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Decrypt has contacted Senator Krueger’s office for additional comments.
New York State has a history of stricter regulations in the crypto space, leading several crypto startups to relocate to other regions in the United States.
