On Wednesday, New York State Senator Liz Krueger presented a tax bill aimed at implementing excise taxes on the energy consumed by crypto mining operations in the state.

The proposed excise tax is structured in tiers:

• No charge for miners using 2.25 million kWh or fewer per year.
• 2 cents per kWh for those consuming between 2.26 million and 5 million kWh annually.
• 3 cents for miners using 5 million-10 million kWh.
• 4 cents per kWh for those up to 20 million kWh.
• 5 cents per kWh for miners exceeding 20 million kWh.

Miners utilizing 100% renewable energy are exempt from this tax. The legislation follows a previous two-year moratorium preventing certain mining activities, which was put in place by Governor Kathy Hochul in 2022 and is set to expire in 2024.

The competitive nature of crypto mining poses challenges for companies, particularly regarding narrow profit margins. Introducing an energy tax could further diminish those margins, potentially pushing miners dependent on grid energy to relocate to more accommodating environments.

First page of mining energy excise tax bill introduced by New York State Senator Liz Krueger. Source: New York Senate

This new proposal highlights the strain on mining companies’ operational costs, especially as energy prices have surged significantly recently.