Cryptic No More: Understanding New York’s Draft GEIS on Cryptocurrency Mining Operations

The New York State (the State or New York) Department of Environmental Conservation (DEC) recently published a draft Generic Environmental Impact Statement (GEIS) examining the environmental, social, and economic costs and benefits of cryptocurrency mining operations that use “proof-of-work” authentication methods to validate transactions and steps the State could take to minimize any impacts.

Proof-of-work authentication is one of the two primary methods for validating cryptocurrency transactions. Proof-of-work cryptocurrency mining operations allow participants to generate or “mine” cryptocurrency by validating transactions for coin rewards by using computational power to solve complex cryptographic puzzles. The energy required by proof-of-work authentication increases as more users attempt to validate transactions because the system increases the difficulty of solving the puzzles and, consequently, such operations are energy intensive.

In 2022, New York’s cryptocurrency mining law, Chapter 628 of the Laws of 2022, established a two-year moratorium, lasting until November 2024, on approving applications and issuing permits for proof-of-work cryptocurrency mining operations powered by behind-the-meter — meaning energy generation on a customer’s side of a utility service meter — carbon-based fuels. That law also required DEC to prepare a GEIS to evaluate the current status of proof-of-work cryptocurrency mining operations in New York State; the sources and amount of electric energy consumed by such operations; the amount of greenhouse gas emissions and co-pollutants released by energy sources attributable to these operations and its potential impact on New York State’s greenhouse gas emission reduction goals; the amount of water used and any water quality impacts caused by proof-of-work cryptocurrency mining operations; and any other public health, economic, and social impacts. Additionally, the draft GEIS covers topics usually included in an Environmental Impact Statement (EIS) pursuant to the requirements of the State Environmental Quality Review Act (SEQR), such as an analysis of cumulative impact and alternatives.

Publicly available data on cryptocurrency mining operations are limited, but DEC identified 11 operations in the State that have relevant information publicly available, though information on whether these operations utilize proof-of-work validation was not accessible because cryptocurrency mining operations are not required to report their electrical demand. For the draft GEIS, DEC made the assumption that all of the cryptocurrency mining operations were proof-of-work operations running at full capacity and estimated the total greenhouse gas emissions from these facilities at three million metric tons of carbon dioxide equivalent per year.

DEC analyzed how greenhouse gas emissions from proof-of-work cryptocurrency mining operations would impact New York’s greenhouse gas reduction goals. These goals are driven by the Climate Leadership and Community Protection Act (Climate Act), signed into law in 2019, which requires the State to reduce greenhouse gas emissions 40% by 2030 and 85% by 2050 of 1990 levels. The State’s clean energy targets are expected to reduce cryptocurrency mining operations’ estimated greenhouse gas emissions, as 70% of the electrical supply of grid-connected operations would be assumed to be generated by renewable sources by 2030. However, New York has acknowledged that it may not meet its projections and noted that an increase in the energy demand associated with proof-of-work cryptocurrency mining operations could make it more difficult for the State to reach clean energy targets.

Companies involved in cryptocurrency in New York should be aware that DEC outlined State and local policy options to consider to minimize the impact of the future development of cryptocurrency mining operations that utilize proof-of-work validation. These proposals signal potential avenues New York may take in regulating cryptocurrency mining operations. In particular, DEC’s draft GEIS focuses on measures that could be implemented to minimize the impacts of energy demand, greenhouse gas emissions, noise and visual impacts, water impacts, and e-waste. The options outlined include discouraging or outright prohibiting proof-of-work cryptocurrency mining operations by legislation or business license requirements; encouraging waste heat recapture programs; requiring disclosure of energy sources and GHG emissions; mandating the use of energy from zero-emission sources; and requiring cryptocurrency mining operations to qualify as flexible resources and participate in demand response programs supporting grid stability.

DEC noted that its draft GEIS is not a substitute for the site-specific reviews of proof-of-work cryptocurrency mining operations required under SEQR or the Climate Act, but that this GEIS can inform those reviews. DEC is accepting written comments on the draft GEIS until September 25, 2025.

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