The New York State Senate

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7389
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  KELLES, ENGLEBRIGHT, LUPARDO, THIELE, GLICK,
   MAGNARELLI, EPSTEIN, BURDICK, STECK, J. D. RIVERA, CLARK, NIOU -- read
   once and referred to the Committee on Banks
 
 AN ACT to establish a moratorium  on  the  operation  of  cryptocurrency
   mining  centers;  and providing for the repeal of such provisions upon
   expiration thereof

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.    Legislative  findings. The legislature hereby finds and
 declares that:
   (a) 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 climactic  zones,  loss  of
 wildlife,  increased  harmful  algal  blooms  and  invasive species, and
 increased risk of disease, in part, which  leads  directly  to  loss  of
 life,  property  damage  and  reduction in value, ecological damage, and
 increased infrastructure costs;
   (b) It is the policy of the State of New York to conserve, improve and
 protect its natural resources and environment and to prevent, abate  and
 control  water,  land and air pollution, in order to enhance the health,
 safety and welfare of the people of the state and their overall economic
 and social well-being;
   (c) To mitigate the current and future effects of climate change,  the
 State  of  New  York  implemented  the  Climate Leadership and Community
 Protection Act, requiring that statewide  greenhouse  gas  emissions  be
 reduced  eighty-five  percent  by  2050  and that the state has net zero
 emissions in all sectors of the economy by that time;
   (d) Cryptocurrency mining centers are an  expanding  industry  in  the
 State  of  New  York,  often, but not exclusively, located in retired or
 converted fossil fuel power stations, including dormant peaker plants;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD11081-03-1

 A. 7389                             2
 
   (e) A single cryptocurrency transaction uses the same amount of energy
 that an average American household uses in one month, with an  estimated
 level  of global energy usage equivalent to that of the country of Swed-
 en; and
   (f)  The  continued  and  expanded  operation of cryptocurrency mining
 centers will greatly increase the amount of energy usage in the State of
 New York, and it is reasonable to believe the associated greenhouse  gas
 emissions  will  irreparably harm compliance with the Climate Leadership
 and Community Protection Act in contravention of state law.
   § 2. (a) There shall be a three-year moratorium on  the  operation  of
 cryptocurrency  mining  centers in the state, including, but not limited
 to cryptocurrency mining centers located in converted fossil fuel  power
 plants.
   (b)   Cryptocurrency  mining  centers  shall  operate  only  following
 completion of a full generic environmental impact  statement  review  as
 authorized  under  NYCRR  §617.10(a)  of the State Environmental Quality
 Review Act. Any generic environmental impact statement required by  this
 act shall be conducted by the New York State Department of Environmental
 Conservation.  Such review shall include, but not be limited to, a cumu-
 lative impact assessment of the greenhouse gas emissions of any proposed
 or existing cryptocurrency mining center for the projected  lifespan  of
 the  center  and  any  associated water quality, air quality or wildlife
 impacts.
   (c) A cryptocurrency mining center that is determined  based  on  site
 specific  or cumulative impacts to adversely affect the state greenhouse
 gas emission targets in the Climate Leadership and Community  Protection
 Act of 2019 shall not commence construction and shall not be eligible to
 receive the necessary permits to operate in the state.
   § 3. Any generic environmental impact statement draft shall be subject
 to  120 days of public comment from the date of issuance. The department
 of environmental conservation shall conduct at least one public  hearing
 in  each  of  the  following regions of the state: western New York, the
 finger lakes, the southern tier, central New York,  the  Mohawk  valley,
 the north country, the capital region/Hudson valley, and the City of New
 York/Long Island, as defined by Empire State Development.
   § 4. For the purposes of this act:
   (a) "cryptocurrency" shall mean a digital currency in which encryption
 techniques are used to regulate the generation of units and currency and
 verify  the  transfer  of  funds, operating independently from a central
 bank;
   (b) "mining" shall mean the process  of  spending  computer  power  to
 process  transactions  and  add  such transactions to a cryptocurrency's
 blockchain; and
   (c) "blockchain" shall mean a digital  ledger  in  which  transactions
 made in cryptocurrencies are recorded chronologically and publicly.
   §  5.  This  act shall take effect immediately and shall expire and be
 deemed repealed three years after such date.

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7389--A
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  KELLES, ENGLEBRIGHT, LUPARDO, THIELE, GLICK,
   MAGNARELLI, EPSTEIN, BURDICK, STECK, J. D. RIVERA, CLARK, NIOU,  FAHY,
   WALLACE, BARRETT, CARROLL, L. ROSENTHAL, HEVESI, SEAWRIGHT, GALLAGHER,
   GONZALEZ-ROJAS,  DE LA ROSA,  BURKE, PICHARDO, STIRPE, MAMDANI, SIMON,
   GRIFFIN, ANDERSON -- read once and referred to the Committee on  Banks
   -- reference changed to the Committee on Environmental Conservation --
   committee  discharged,  bill amended, ordered reprinted as amended and
   recommitted to said committee
 
 AN ACT to amend the  environmental  conservation  law,  in  relation  to
   establishing  a  moratorium on consolidated operations that use proof-
   of-work authentication methods to  validate  blockchain  transactions;
   and  to require a comprehensive generic environmental impact statement
   review
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.    Legislative  findings. The legislature hereby finds and
 declares that:
   (a) 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
 wildlife,  increased  harmful  algal  blooms  and  invasive species, and
 increased risk of disease, in part, which  leads  directly  to  loss  of
 life,  property  damage  and  reduction in value, ecological damage, and
 increased infrastructure costs;
   (b) It is the policy of the State of New York to conserve, improve and
 protect its natural resources and environment and to prevent, abate  and
 control  water,  land and air pollution, in order to enhance the health,
 safety and welfare of the people of the state and their overall economic
 and social well-being;
   (c) To mitigate the current and future effects of climate change,  the
 State  of  New  York  implemented  the  Climate Leadership and Community
 Protection Act, requiring that statewide  greenhouse  gas  emissions  be
 

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11081-12-1

 A. 7389--A                          2
 
 reduced  eighty-five  percent  by  2050  and that the state has net zero
 emissions in all sectors of the economy by that time;
   (d) Data centers running proof-of-work authentication methods to vali-
 date  blockchain  transactions are an expanding industry in the State of
 New York, often, but not exclusively, located in  retired  or  converted
 fossil fuel power stations, including in dormant peaker plants;
   (e)  The magnitude of computer processing output required to authenti-
 cate a single block of a blockchain with a proof-of-work method uses  as
 much energy as an average American household uses in a month. The annual
 global energy use for proof-of-work 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  Face-
 book combined;
   (f)  The  continued  and  expanded  operation  of data centers running
 proof-of-work authentication methods to validate blockchain transactions
 will greatly increase the amount of energy usage in  the  State  of  New
 York,  and  it  is  reasonable  to believe the associated greenhouse gas
 emissions will irreparably harm compliance with the  Climate  Leadership
 and Community Protection Act in contravention of state law;
   (g)  Consolidated  operations  that  use  proof-of-work authentication
 methods to validate blockchain transactions often use large  amounts  of
 water,  which,  when  discharged,  can raise the temperature of adjacent
 water bodies to levels that harm aquatic life,  including  fish  species
 that  are  important  for local tourism, and may increase the amount and
 frequency of harmful algal blooms on lakes, ponds and streams; and
   (h) Many fossil fuel power plants have been shut down across the state
 in recent years due to  reduced  energy  demand,  improved  transmission
 capacity  and non-economic carbon-based fuel sources. Consolidated oper-
 ations that use proof-of-work authentication methods to validate  block-
 chain  transactions  are bringing these plants back online, with behind-
 the-meter operations  that  greatly  exceed  the  previous  intermittent
 usage,  and  can cause significant negative impacts to air quality espe-
 cially in environmental justice communities.
   § 2. The environmental conservation law is amended  by  adding  a  new
 section 19-0329 to read as follows:
 § 19-0329. MORATORIUM ON PERMIT ISSUANCE AND RENEWAL.
   1.  THE  DEPARTMENT SHALL NOT APPROVE A NEW APPLICATION FOR OR ISSUE A
 NEW PERMIT PURSUANT TO THIS ARTICLE FOR AN ELECTRIC GENERATING  FACILITY
 THAT  UTILIZES  A  CARBON-BASED  FUEL  AND THAT PROVIDES, IN WHOLE OR IN
 PART, BEHIND-THE-METER ELECTRIC ENERGY CONSUMED OR UTILIZED BY A FACILI-
 TY THAT USES PROOF-OF-WORK AUTHENTICATION METHODS TO VALIDATE BLOCKCHAIN
 TRANSACTIONS.
   2. THE DEPARTMENT SHALL NOT APPROVE AN APPLICATION TO RENEW AN  EXIST-
 ING  PERMIT  OR  ISSUE  A RENEWAL PERMIT PURSUANT TO THIS ARTICLE FOR AN
 ELECTRIC GENERATING FACILITY THAT UTILIZES A CARBON-BASED FUEL AND  THAT
 PROVIDES, IN WHOLE OR IN PART, BEHIND-THE-METER ELECTRIC ENERGY CONSUMED
 OR UTILIZED BY A FACILITY THAT USES PROOF-OF-WORK AUTHENTICATION METHODS
 TO  VALIDATE BLOCKCHAIN TRANSACTIONS IF THE RENEWAL APPLICATION SEEKS TO
 INCREASE OR WILL ALLOW OR RESULT IN AN INCREASE IN THE AMOUNT  OF  ELEC-
 TRIC  ENERGY  CONSUMED OR UTILIZED BY A FACILITY THAT USES PROOF-OF-WORK
 AUTHENTICATION METHODS TO VALIDATE BLOCKCHAIN TRANSACTIONS.
   § 3. Generic environmental impact statement.  (a)  The  department  of
 environmental  conservation  shall prepare, pursuant to article eight of
 the environmental  conservation  law,  a  generic  environmental  impact
 statement  on  statewide  consolidated operations that use proof-of-work
 authentication methods to validate blockchain transactions.

 A. 7389--A                          3
 
   (b) The generic environmental impact statement  shall  address,  at  a
 minimum:
   (i)  the  number and location of existing consolidated operations that
 use proof-of-work authentication methods to validate  blockchain  trans-
 actions in the state;
   (ii) the amount of electric energy consumed by each such operation;
   (iii)  the  sources of electric energy consumed by each such operation
 and the type of fuel used by each energy source;
   (iv) the amount of greenhouse gas emissions and co-pollutants released
 by each energy source  attributable  to  providing  electric  energy  to
 consolidated operations that use proof-of-work authentication methods to
 validate blockchain transactions;
   (v)  the anticipated increase, if any, of consolidated operations that
 use proof-of-work authentication methods to validate  blockchain  trans-
 actions  in the state and the anticipated expansion, if any, of existing
 operations;
   (vi) the potential impacts of electric energy consumption  by  consol-
 idated operations that use proof-of-work authentication methods to vali-
 date  blockchain  transactions on the state's ability to meet the green-
 house gas emission reduction goals set forth in article seventy-five  of
 the environmental conservation law;
   (vii) the water quality and other ecological impacts, if any, of cool-
 ing  water use by consolidated operations that use proof-of-work authen-
 tication methods to validate blockchain transactions;
   (viii) the potential public health impacts, if any, due to reduced air
 and water quality in communities near consolidated operations  that  use
 proof-of-work  authentication  methods  to  validate  blockchain  trans-
 actions;
   (ix) the potential statewide  public  health  impacts,  if  any,  from
 increased  greenhouse  gas  emissions released by statewide consolidated
 operations that use proof-of-work  authentication  methods  to  validate
 blockchain transactions; and
   (x)  the  social  and  economic costs and benefits, if any, of consol-
 idated operations that use proof-of-work authentication methods to vali-
 date blockchain transactions.
   § 4. Any generic environmental impact statement draft shall be subject
 to 120 days of public comment from the date of issuance. The  department
 of  environmental conservation shall conduct at least one public hearing
 in each of the following regions of the state:  western  New  York,  the
 finger  lakes,  the  southern tier, central New York, the Mohawk valley,
 the north country, the capital region/Hudson valley, and the City of New
 York/Long Island, as defined by  the  Empire  State  Development  Corpo-
 ration.
   §  5.  The department shall issue a final generic environmental impact
 statement after close of the public comment and public hearing period.
   § 6. For the purposes of this act:
   (a) "proof-of-work" shall mean a consensus algorithm in  a  blockchain
 network  used  to  confirm  and  produce  new blocks to the chain, where
 competitors complete new blocks and  where  the  algorithm  changes  the
 complexity  of  the  competition  in a manner that is designed to and/or
 results in increased energy usage for each competitor when the complexi-
 ty is increased; and
   (b) "blockchain" shall mean a digital ledger in which transactions are
 recorded chronologically and publicly.
   § 7. This act shall take effect immediately.

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7389--B
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 6, 2021
                                ___________
 
 Introduced  by  M.  of  A.  KELLES, LUPARDO, ENGLEBRIGHT, THIELE, GLICK,
   MAGNARELLI, EPSTEIN, BURDICK, STECK, J. D. RIVERA, CLARK, NIOU,  FAHY,
   WALLACE,  BARRETT, CARROLL, L. ROSENTHAL, SEAWRIGHT, GALLAGHER, GONZA-
   LEZ-ROJAS, DE LA ROSA, BURKE, STIRPE, MAMDANI, SIMON, GRIFFIN,  ANDER-
   SON,  McMAHON,  MITAYNES,  OTIS, McDONALD, GOTTFRIED, GALEF, DINOWITZ,
   PRETLOW -- read once and referred to the Committee on Banks --  refer-
   ence changed to the Committee on Environmental Conservation -- commit-
   tee  discharged, bill amended, ordered reprinted as amended and recom-
   mitted to said committee -- again reported from  said  committee  with
   amendments,  ordered  reprinted  as  amended  and  recommitted to said
   committee
 
 AN ACT to amend the  environmental  conservation  law,  in  relation  to
   establishing  a  moratorium on consolidated operations that use proof-
   of-work authentication methods to  validate  blockchain  transactions;
   and  to require a comprehensive generic environmental impact statement
   review
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.    Legislative  findings. The legislature hereby finds and
 declares that:
   (a) 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
 wildlife,  increased  harmful  algal  blooms  and  invasive species, and
 increased risk of disease, in part, which  leads  directly  to  loss  of
 life,  property  damage  and  reduction in value, ecological damage, and
 increased infrastructure costs;
   (b) It is the policy of the State of New York to conserve, improve and
 protect its natural resources and environment and to prevent, abate  and
 control  water,  land and air pollution, in order to enhance the health,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11081-14-1

 A. 7389--B                          2
 
 safety and welfare of the people of the state and their overall economic
 and social well-being;
   (c)  To mitigate the current and future effects of climate change, the
 State of New York  implemented  the  Climate  Leadership  and  Community
 Protection  Act,  requiring  that  statewide greenhouse gas emissions be
 reduced eighty-five percent by 2050 and that  the  state  has  net  zero
 emissions in all sectors of the economy by that time;
   (d) Data centers running proof-of-work authentication methods to vali-
 date  blockchain  transactions are an expanding industry in the State of
 New York, often, but not exclusively, located in  retired  or  converted
 fossil fuel power stations, including in dormant peaker plants;
   (e)  The magnitude of computer processing output required to authenti-
 cate a single block of a blockchain with a proof-of-work method uses  as
 much energy as an average American household uses in a month. The annual
 global energy use for proof-of-work 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  Face-
 book combined;
   (f)  The  continued  and  expanded  operation  of data centers running
 proof-of-work authentication methods to validate blockchain transactions
 will greatly increase the amount of energy usage in  the  State  of  New
 York,  and  it  is  reasonable  to believe the associated greenhouse gas
 emissions will irreparably harm compliance with the  Climate  Leadership
 and Community Protection Act in contravention of state law;
   (g)  Consolidated  operations  that  use  proof-of-work authentication
 methods to validate blockchain transactions often use large  amounts  of
 water,  which,  when  discharged,  can raise the temperature of adjacent
 water bodies to levels that harm aquatic life,  including  fish  species
 that  are  important  for local tourism, and may increase the amount and
 frequency of harmful algal blooms on lakes, ponds and streams; and
   (h) Many fossil fuel power plants have been shut down across the state
 in recent years due to  reduced  energy  demand,  improved  transmission
 capacity  and non-economic carbon-based fuel sources. Consolidated oper-
 ations that use proof-of-work authentication methods to validate  block-
 chain  transactions  are bringing these plants back online, with behind-
 the-meter operations  that  greatly  exceed  the  previous  intermittent
 usage,  and  can cause significant negative impacts to air quality espe-
 cially in environmental justice communities.
   § 2. The environmental conservation law is amended  by  adding  a  new
 section 19-0329 to read as follows:
 § 19-0329. MORATORIUM ON PERMIT ISSUANCE AND RENEWAL.
   1. FOR THE PERIOD COMMENCING ON THE EFFECTIVE DATE OF THIS SECTION AND
 ENDING  THREE  YEARS AFTER SUCH DATE, THE DEPARTMENT SHALL NOT APPROVE A
 NEW APPLICATION FOR OR ISSUE A NEW PERMIT PURSUANT TO THIS  ARTICLE  FOR
 AN  ELECTRIC  GENERATING  FACILITY THAT UTILIZES A CARBON-BASED FUEL AND
 THAT PROVIDES, IN WHOLE OR IN  PART,  BEHIND-THE-METER  ELECTRIC  ENERGY
 CONSUMED  OR  UTILIZED BY A FACILITY THAT USES PROOF-OF-WORK AUTHENTICA-
 TION METHODS TO VALIDATE BLOCKCHAIN TRANSACTIONS.
   2. FOR THE PERIOD COMMENCING ON THE EFFECTIVE DATE OF  THIS    SECTION
 AND ENDING THREE YEARS AFTER SUCH DATE, THE DEPARTMENT SHALL NOT APPROVE
 AN  APPLICATION  TO  RENEW  AN EXISTING PERMIT OR ISSUE A RENEWAL PERMIT
 PURSUANT TO THIS  ARTICLE  FOR  AN  ELECTRIC  GENERATING  FACILITY  THAT
 UTILIZES  A  CARBON-BASED  FUEL  AND THAT PROVIDES, IN WHOLE OR IN PART,
 BEHIND-THE-METER ELECTRIC ENERGY CONSUMED OR UTILIZED BY A FACILITY THAT
 USES PROOF-OF-WORK AUTHENTICATION METHODS TO VALIDATE BLOCKCHAIN  TRANS-
 ACTIONS  IF  THE  RENEWAL APPLICATION SEEKS TO INCREASE OR WILL ALLOW OR
 A. 7389--B                          3

 RESULT IN AN INCREASE IN THE  AMOUNT  OF  ELECTRIC  ENERGY  CONSUMED  OR
 UTILIZED BY A FACILITY THAT USES PROOF-OF-WORK AUTHENTICATION METHODS TO
 VALIDATE BLOCKCHAIN TRANSACTIONS.
   §  3.  Generic  environmental  impact statement. (a) The department of
 environmental conservation shall prepare, pursuant to article  eight  of
 the  environmental  conservation  law,  a  generic  environmental impact
 statement on statewide consolidated operations  that  use  proof-of-work
 authentication methods to validate blockchain transactions.
   (b)  The  generic  environmental  impact statement shall address, at a
 minimum:
   (i) the number and location of existing consolidated  operations  that
 use  proof-of-work  authentication methods to validate blockchain trans-
 actions in the state;
   (ii) the amount of electric energy consumed by each such operation;
   (iii) the sources of electric energy consumed by each  such  operation
 and the type of fuel used by each energy source;
   (iv) the amount of greenhouse gas emissions and co-pollutants released
 by  each  energy  source  attributable  to  providing electric energy to
 consolidated operations that use proof-of-work authentication methods to
 validate blockchain transactions;
   (v) the anticipated increase, if any, of consolidated operations  that
 use  proof-of-work  authentication methods to validate blockchain trans-
 actions in the state and the anticipated expansion, if any, of  existing
 operations;
   (vi)  the  potential impacts of electric energy consumption by consol-
 idated operations that use proof-of-work authentication methods to vali-
 date blockchain transactions on the state's ability to meet  the  green-
 house  gas emission reduction goals set forth in article seventy-five of
 the environmental conservation law;
   (vii) the water quality and other ecological impacts, if any, of cool-
 ing water use by consolidated operations that use proof-of-work  authen-
 tication methods to validate blockchain transactions;
   (viii) the potential public health impacts, if any, due to reduced air
 and  water  quality in communities near consolidated operations that use
 proof-of-work  authentication  methods  to  validate  blockchain  trans-
 actions;
   (ix)  the  potential  statewide  public  health  impacts, if any, from
 increased greenhouse gas emissions released  by  statewide  consolidated
 operations  that  use  proof-of-work  authentication methods to validate
 blockchain transactions; and
   (x) the social and economic costs and benefits,  if  any,  of  consol-
 idated operations that use proof-of-work authentication methods to vali-
 date blockchain transactions.
   § 4. Any generic environmental impact statement draft shall be subject
 to  120 days of public comment from the date of issuance. The department
 of environmental conservation shall conduct at least one public  hearing
 in  each  of  the  following regions of the state: western New York, the
 finger lakes, the southern tier, central New York,  the  Mohawk  valley,
 the north country, the capital region/Hudson valley, and the City of New
 York/Long  Island,  as  defined  by  the Empire State Development Corpo-
 ration.
   § 5. The department shall issue a final generic  environmental  impact
 statement  after  close  of the public comment and public hearing period
 and no later than two years after the effective date of this act.
   § 6. For the purposes of this act:
 A. 7389--B                          4
 
   (a) "proof-of-work" shall mean a consensus algorithm in  a  blockchain
 network  used  to  confirm  and  produce  new blocks to the chain, where
 competitors complete new blocks and  where  the  algorithm  changes  the
 complexity  of  the  competition  in a manner that is designed to and/or
 results in increased energy usage for each competitor when the complexi-
 ty is increased; and
   (b) "blockchain" shall mean a digital ledger in which transactions are
 recorded chronologically and publicly.
   § 7. This act shall take effect immediately.