Crypto becoming a repeat campaign question for Hochul

Photo courtesy of Spectrum News.

During last week’s gubernatorial debate, Gov. Kathy Hochul was asked about a piece of legislation she has not signed, Assembly Bill A7389C, sponsored by Anna Kelles, D-Ithaca, and S.6486, sponsored by Kevin Parker, D-Brooklyn.

The bill, which would place establish a two year moratorium on proof-of-work cryptomining in New York state and request an environmental study of the industries impact, hasn’t been signed since its passing June 2.  

“Proof-of -work” cryptomining is considered more harmful to the environment because it uses extremely large amounts of energy, often obtained from coal or natural gas, and pollutes the local air and water supplies.

In response to the question Hochul said, “I’m looking at that bill closely, this has nothing to do with whether or not we embrace the cryptocurrency industry.” She also referenced the Department of Environmental Conservations effective shutdown of Greenridge Generation, a cryptomining plant, after they did not renew their air permit.

Greenridge Generation, formerly based in Dresden, New York, released total emissions of 514,012 short tons CO2e of greenhouse gasses in 2021 according to the New York State Department of Environmental Conservation. This led to the DEC’s permit decision. Prior to this, environmental advocates pushed against its operations citing its effect on Seneca Lake water temperatures and the local environment.

Gov. Hochul has previously said she has not been able to evaluate the bill and sign it due to the countless other pieces of legislation she is responsible for. At a primary debate in June she said, “This bill came up at the very end of session. We didn’t have a chance to have our legislative team engage with it, to work out any problems or to say yes or no or [make] any modifications that normally occur in the process.” 

Republican candidate for governor, Rep. Lee Zeldin, said he has no interest in signing the bill if elected on Nov. 8. He said, “I wouldn’t and we shouldn’t be picking winners and losers in business and you see it right now getting played out as far as they’re raising, donating money for my opponent trying to curry favor.” According to the New York State Board of Elections, Ashton Soniat, chairman and ceo of Coinmint, a cryptocurrency company with a mining operation in Massena, New York, contributed $40,000 to the political action committee, Friends of Kathy Hochul, in May. 

Proof-of-work crypto mining uses computers to solve complex mathematical problems in order to release blocks of cryptocurrency to it’s operators. This process requires a high level of processing speed from computers which in turn use a great deal of energy. The industry as a whole uses more energy than some countries.

It also produces heat. In order to cool the computers so they continue to function properly, water is run along them in tubing to regulate their temperature. The water is then discharged into wastewater plants or into surface water like lakes or rivers. Greenridge Generation discharged 140 million gallons of hot water into Seneca Lake while it was in operation.

In September, Kelles and advocates for climate justice pushed for Gov. Hochul to sign the bill, pointing to proof-of-stake crypto mining as a less harmful alternative available to cryptominers worried about the health of the industry.

“Throughout the past legislative session the blockchain and more specifically the cryptocurrency industry repeatedly claimed that this bill for a two year moratorium on the use of fossil fuel based power plants, meaning its very specific and narrow, would kill the the crypto currency industry here in New York and this industry argument holds no water as was proven over the last week. Ethereum‘s successful merger demonstrates that proof-of-work cryptocurrency mining is not necessary for the industry to grow, including here in New York, and crypto most importantly can be energy efficient while continuing to grow in New York without using the energy consumptive proof of work method,” said Assemblymember Kelles.

Ethereum, a type of cryptocurrency, transitioned to the more environmentally friendly proof-of-stake mining process on Sept. 15. Ethereum states that this will drop its cryptocurrency’s energy consumption by 99.5 percent. This is because proof-of-stake mining does not rely on computer based, and energy intensive, problem solving. It instead asks miners, who are now referred to as validators, to verify cryptocurrency transactions and validate block information to release cryptocurrency to themselves.

To Kelles’ point about the proof-of-stake’s safety, David Banks, program director of Globalization Studies at the University at Albany said, “New York’s threatened ban seems to have been good enough to have probably saved a lot of communities some very serious environmental problems. Crypto mining outfits in other states and countries are known for setting up shop in old industrial buildings with little-to-no regulation or upside for the community since these things don’t source any local materials nor do they create jobs. With proof of stake those environmental concerns are mostly satiated.”

There are currently more than 20 regulated crypto business in New York.

Earthjustice, a nonprofit environmental law organization, released a comprehensive white paper on the environmental and community concerns facing parts of the country and state that host crypto mining operations.

“We’re very concerned that this industry, given how much energy it consumes, does not align with the states climate goals. So we have been working with a number of partners across the state to urge Governor Hochul to sign this legislation into law to make sure we’re not going directly against our climate law,” said Elizabeth Moran, policy advocate for Earthjustice.