New York Proposes Graduated Energy Tax on Bitcoin Miners Reaching 5 Cents Per Kilowatt Hour With Full Exemption for Renewable Power Operations

New York’s Energy Tax Could Change the $70,000 Question: Where to Mine Bitcoin

Senator Liz Krueger’s proposal to tax crypto mining power use may reshape the industry, while giving a free pass to operations running on clean energy.

In upstate New York, the whir of mining rigs fills the quiet hours before sunrise. Those machines, running flat out when electricity is cheapest, may soon face a new kind of cost. State Senator Liz Krueger has put forward a bill that slaps an extra tax on crypto miners based on how much energy they burn. It’s not just another rule tucked into the books. Industry watchers see it as part of a much bigger shift in how governments deal with the enormous energy appetite of proof-of-work mining.

At first glance, the framework looks simple. Small operators using less than 2.25 million kilowatt-hours a year wouldn’t pay anything extra. Bigger players, however, would move up a sliding scale, topping out at five cents per kilowatt-hour once their usage crosses 20 million kWh. There’s one big exception: miners powered entirely by renewable energy. That carve-out effectively splits the industry into two camps, rewarding those tied to clean sources and pressuring anyone still leaning on fossil fuels.

When the Numbers Don’t Add Up

The math tells the story. Electricity in New York averaged around eight cents per kWh early this year. With Krueger’s tax layered on, costs could spike anywhere from 25% to more than 60% depending on the scale of the operation. For miners already facing thin margins, even a penny or two per kilowatt-hour can flip profit into loss.

Consider TeraWulf, which runs a major site in the state. In the first quarter of 2025, the company reported a $61.4 million loss as power bills surged far faster than revenue. Their struggle isn’t unique. Mining is an energy game, and when regulators raise the price of power, they aren’t just nudging revenues—they’re deciding who survives.

A Moratorium’s Shadow Still Lingers

This new tax doesn’t come out of the blue. From 2022 to 2024, New York froze permits for proof-of-work miners using behind-the-meter fossil fuel plants. Governor Kathy Hochul signed off on the pause, demanding an environmental review before any new approvals. Clean energy miners could keep operating, but fossil fuel-driven sites were boxed out. Krueger’s tax takes the same spirit and moves it from a direct ban to a cost-based squeeze.

Environmental groups have long raised red flags about miners stressing the grid, raising wholesale prices, and leaving ordinary ratepayers with the bill. The state’s Department of Environmental Conservation backed those concerns in its review, which now gives lawmakers solid ground to justify new measures.

The Idea Spreads Beyond New York

What makes New York stand out isn’t the fine print but the timing. It fits into a global pattern. The Biden administration floated a 30% federal tax on mining energy use back in 2023, though it died during debt ceiling talks. Kazakhstan has already set fees of its own. Norway moved this summer to propose a temporary ban on new high-power mining operations, citing electricity shortages. Even Russia imposes restrictions in Siberia during peak winter demand.

Closer to home, Arkansas pulled back its once-welcoming “Right to Mine” law and handed power back to local governments, while counties in North Carolina have imposed moratoriums over grid stress. The momentum is clear: countries and states are rethinking whether they can afford to host such energy-hungry operations.

Mining now eats up between 0.6% and 2.3% of total U.S. electricity. That demand arrives just as AI and data centers push usage to record highs. With climate pledges to meet and grid stability at stake, lawmakers increasingly view mining as low-hanging fruit for new rules.

Winners and Losers

These shifting rules are reshaping the playing field. Miners who own renewable power sources—hydro dams, wind farms, or solar plants with solid tracking systems—suddenly enjoy a competitive edge. They can prove their energy is clean and dodge the tax, while selling excess power at premium rates.

Those tethered to the grid don’t have it so easy. For them, higher costs stack up quickly. Restarting old fossil-fuel plants just to mine Bitcoin looks less and less viable. Many expect capacity to migrate toward friendlier regions: Quebec with its cheap hydropower, parts of Texas with flexible markets, or Latin American countries flush with renewable energy.

Adapting to the New Reality

For investors and operators, this landscape demands sharper strategies. Energy deals aren’t just about headline rates anymore. They hinge on contract details: hourly pricing, curtailment clauses, demand charges, and the fine print on renewable certificates. Verification systems matter too, since regulators will want proof down to the last kilowatt.

Some miners may pivot into related fields like high-performance computing or AI hosting, where customers pay more and regulators show less interest. Spreading operations across multiple jurisdictions and forging strong ties with utilities could also help companies weather the storm.

What to Watch Next

Several details could decide how this plays out. How exactly will “100% renewable” be defined? Will utilities design special tariffs for miners willing to shut down at peak times? And will companies exposed to New York start signaling moves to cheaper markets?

Whether Krueger’s bill makes it through or stalls in court, it’s already acting as a blueprint. Other governments may follow suit, transforming electricity pricing from a basic operating cost into the deciding factor of where—and whether—Bitcoin mining can remain profitable.

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