New York Proposes Tax on Cryptocurrency Mining
New York lawmakers have introduced a bill to tax cryptocurrency mining operations. They say the industry’s high electricity use raises costs for residents and small businesses.
State Senator Liz Krueger and Assemblymember Anna Kelles introduced Senate Bill S8518 on October 1. The bill would charge mining firms based on their annual power consumption. Revenue would fund the state’s Energy Affordability Programs, helping households with utility bills.
Details of the Proposed Tax
The bill sets a tiered tax rate based on electricity use:
- 2 cents per kWh for 2.25 to 5 million kWh
- 3 cents per kWh for 5 to 10 million kWh
- 4 cents per kWh for 10 to 20 million kWh
- 5 cents per kWh for over 20 million kWh
The highest users could pay $1 million or more annually. If passed, the tax would start in 2027.
Lawmakers cited research showing Bitcoin mining adds about $79 million yearly to household bills and $165 million to small businesses in New York.
In 2023, electricity rates varied: households paid 22.25 cents per kWh, commercial users 18.01 cents, and industrial users 6.87 cents. Facilities using only renewable energy and off the state grid would be exempt.
Impact of Rising Mining Costs
The bill follows reports that mining a single Bitcoin cost over $70,000 this year. There are concerns that higher taxes could make large-scale, grid-based mining unprofitable.
The bill states New Yorkers face higher bills due to unregulated proof-of-work mining, with little benefit to the public.
Proof-of-work cryptocurrencies like Bitcoin and Dogecoin rely on large networks of computers that consume significant electricity. This can cause environmental issues such as air pollution, water use, and electronic waste.
Other sectors, including AI and high-performance computing, also use large amounts of energy, sometimes more than Bitcoin mining.
