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
