TLDR:
- Bill S.8518 taxes energy for proof-of-work crypto mining, with rates rising above 2.25M kWh in New York.
- Taxes scale from 2¢ to 5¢ per kWh for crypto miners above set thresholds under new NY plan.
- Exemptions apply if mining uses off-grid renewable energy not tied to electric grid.
- All collected funds would support energy affordability programs across New York State.
Crypto miners in New York may soon face a new cost shock. A state senator has introduced a bill targeting energy use in proof-of-work mining.
The proposed law would levy an excise tax on electricity consumed by mining operations. That tax would funnel into programs helping struggling utility customers. This draft legislation marks a fresh regulatory turn in crypto policy within the state.
Excise Tax on Crypto Mining Energy Use Explained
Senate Bill S.8518, filed October 1, proposes adding section 186-h to the state tax code. It would impose an excise tax on electricity used for digital asset mining that uses proof-of-work. The tax applies only to consumption above defined thresholds in New York.
Under the bill, the first 2.25 million kilowatt-hours (kWh) per year per miner incur no tax. For usage between 2.25 million and 5 million kWh, the rate is 2¢ per kWh. Going higher, rates climb: 3¢ for 5–10M kWh, 4¢ for 10–20M kWh, and 5¢ for usage above 20M kWh.
Not all operations face this tax. Miners using renewable energy, and not tied to grid distribution, could avoid it. Also, entities in a “controlled group” are treated as one for total energy use, meaning affiliated miners pool usage.
The bill also states tax revenue, including interest and penalties, must fund energy affordability programs. It would take effect immediately and apply to taxable years starting January 1, 2027.
Impact on Crypto Price, Policy & Miners in New York
This excise tax directly links energy costs to mining viability in New York. Miners will have to factor in extra cost per kWh. If power costs are already high, this tax could squeeze margins. That could influence decisions to relocate operations or reduce output.
Because the tax is tied to proof-of-work methods, Bitcoin and older mining chains may feel the pressure more. Altcoins using proof-of-stake or lighter energy models may become more appealing in the state. The move could shift local investment flows.
Some crypto firms might invest more in renewables or off-grid setups to dodge the tax. That incentive is built into the bill’s exemption clauses. But that shift requires capital and planning. Not all miners can pivot quickly.
In markets, price might sense this development as regulatory risk. Traders may view it as a headwind for energy-heavy mining firms, especially those with exposure in New York. But the broader crypto price is unlikely to swing sharply from one state’s tax law.
Supporters, including Sen. Liz Krueger and Assemblymember Anna Kelles, frame the bill as balancing environmental concerns and social needs. They argue crypto can’t run free of its energy footprint. Opponents warn of deterrent effects on tech investment.
The bill’s journey now leads to committee review. Lawmakers will debate amendments, cost estimates, and miner pushback. If passed, 2027 will mark a new era of crypto energy taxation in New York.
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Source: https://blockonomi.com/new-york-bill-seeks-energy-excise-tax-on-crypto-mining-activity/