New York Lawmakers Push Crypto Mining Tax to Lower Energy Costs

New York Democrats are pitching a new tax on crypto mining facilities that lawmakers say are driving up energy costs in New York.

Faced with increasing residential utility costs and seeking fresh revenue streams, the state Assembly included the pitch in their one-house spending proposals in early March. Industry groups are now attempting to dissuade lawmakers from advancing the tax in the final budget, due April 1. Neither the state Senate nor Gov. Kathy Hochul (D) has endorsed the measure yet, although negotiations are now underway.

The proposed crypto mining tax comes as energy consumption costs have supercharged debates around affordability in New York ahead of the midterm elections. Democrats have increasingly questioned the energy demand driven by AI and large-scale manufacturing, and argue it isn’t worth the number of jobs created by those industries.

“Their existence is one of the central reasons that our utility bills are going up,” said Assemblymember Anna Kelles (D), who sponsored legislation last year that mirrors the tax proposal. She said the narrow focus was “intentional” because cryptocurrency “is a very risky industry.”

Lawmakers want to create a tiered excise tax on crypto facilities using at least 2.25 million kilowatt-hours annually of electricity, targeting companies relying on energy-intensive proof-of-work authentication methods. The tax would range from 2 cents per kilowatt-hour to 5 cents per kilowatt-hour.

The tax would generate $95 million beginning in 2027 and $380 million annually through 2030, according to an estimate from the Assembly. The revenue would be used to help fund a one-time $2.6 billion rebate credit to offset utility bills for New York residents.

Industry groups such as Digital Power Now have objected to the measure, calling it a “de facto ban on the entire industry, disguised as tax policy” in a memo obtained by Bloomberg Government and distributed to lawmakers March 23.

“Data centers, artificial intelligence, manufacturing, and heavy industry consume comparable or greater amounts of power, yet face no such penalty,” the group wrote, adding it believes the unique tax violates constitutional protections under the Commerce Clause.

‘Winners And Losers’

New York previously approved a two-year moratorium on crypto mining facilities that ended in November 2024. Now, the New York Public Service Commission could take up the question of how to structure the utility rates for large load users, such as data centers tied to cryptocurrency mining, Kelles said.

The proposal specifies the tax would apply to digital asset mining that uses proof-of-work authentication methods, which require complex computations and rely on massive amounts of energy.

Such a tax would represent the legislature “picking winners and losers in the energy market,” said John Olsen, a tech lobbyist with Statewide Public Affairs.

Opponents to the tax argue that miners often use alternative energy sources and invest in clean energy. They also represent a source of well-paid jobs in areas of upstate New York that have suffered from economic depression in recent decades, said Sonya Murphy, senior policy associate with the Digital Power Network.

The two-year moratorium on new fossil fuel based proof-of-work mining discouraged new cryptocurrency companies from entering the market before it lifted in 2024, and Murphy said levying an additional tax on the industry would prevent companies from entering New York’s market now.

“This is opening up the door to much worse policies in the future, and it creates a lot of uncertainty for business here,” Murphy said. She added that lawmakers imposing a ban in advance of guidance from the state’s utilities regulator would be “short-sighted.”