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Legislative Update: Bills Target Cryptomining’s Energy Consumption

June 9, 2023


Cryptocurrency mining has boomed over the last decade, and with that explosion has come increased attention from the public and more scrutiny from policymakers. Just a few years ago, China was home to approximately three-quarters of the world’s cryptomining operations, the result of abundant, cheap, renewable energy coupled with governmental incentives aimed at attracting cryptocurrency miners, especially bitcoin miners who compose the majority of the industry.1 But, by the fall of 2021, backlash against cryptocurrency by the Chinese government led to nearly a complete ban on cryptomining and cryptocurrency trading in the country.2

With China out, the United States has become the leading home of cryptomining, now accounting for just over one-third of Bitcoin’s “hashrate”—the industry term to describe the collective computing power of cryptocurrency miners.3 Texas has been site of the largest influx of cryptomining, thanks to its relatively affordable energy and the state’s cryptocurrency-friendly policymakers.4 Texas was the second state to include cryptocurrency and blockchain in its commercial law, and at one point, Gov. Greg Abbott tweeted that Texas will be the leader in worldwide cryptocurrency.5

The rapid growth of cryptomining in the US has not gone unnoticed by its detractors. Critics decry the amount of energy used in cryptomining, claiming that it strains power grids and spikes energy costs for residents. Environmental advocates also maintain that cryptomining leads to the use of dirtier sources of energy at a time when the US is attempting to decrease reliance on fossil fuels.6 Most criticisms of cryptomining focus on a method called “proof-of-work” mining, which uses significantly more energy than some other methods.

In response, politicians at both the state and federal levels have called for more studies, and they have introduced legislation aimed at reducing the greenhouse gas emissions and energy use from existing mines, and moving the US away from the proof-of-work method. This update looks at the state of cryptomining legislation.


In April 2023, President Biden released his proposed budget plan for 2024, which includes the Digital Asset Mining Energy excise tax (the “DAME”). Beginning in 2024, the DAME tax would be phased in over three years at a rate of 10 percent (of the cost of the electricity used in cryptomining) in the first year, 20 percent in the second, and 30 percent thereafter.7

In March 2023, the Biden Administration issued Executive Order 14067, commissioning a report on the energy and climate implications of crypto-assets in the US The White House Office of Science and Technology Policy issued its report six months later, and its primary recommendations were to minimize greenhouse gas emissions and other environmental impacts by increasing technical assistance and improving collaboration among the states, the Department of Energy, and the Environmental Protection Agency.8

In late 2022, Sen. Edward J. Markey lead the introduction of the Crypto-Asset Environmental Transparency Act, which would require the EPA to conduct a comprehensive impact study of US cryptomining and require the reporting of greenhouse gas emissions from cryptomining operations that consume more than five megawatts of power.9

The States

New York

In November 2022, New York Governor Kathy Hochul signed Assembly Bill A7389C, which imposes a two-year moratorium on new proof-of-work mines and denies permit renewals for existing proof-of-work mines that seek to increase their energy usage.10  The moratorium only applies to facilities that utilize carbon-based fuel—e.g., coal-fired or gas-fired power plants. Facilities that utilize renewable energy (e.g., solar or wind) to power their proof-of-work operations are not subject to the moratorium or the permit-renewal restrictions. The legislation also requires the New York Department of Environmental Conservation to prepare an environmental impact study examining the effects of proof-of-work cryptomining in the state.11


In January 2023, Oregon politicians introduced House Bill 2816, which would require cryptomining operations in the state to reduce their carbon emissions 60 percent by 2027, 80 percent by 2030, 90 percent by 2035, and 100 percent by 2040.12  H.B. 2816 is meant to expand on an earlier clean-energy measure passed in 2021, H.B. 2021, which requires Oregon’s public utilities and energy-service suppliers (ESSs) to reduce greenhouse gas emissions 100 percent by 2040. H.B. 2021 set baseline emissions for ESSs at .428 metric tons of carbon dioxide equivalent per megawatt hour of electricity. H.B. 2816 applies the same .428 metric tons of carbon dioxide baseline to cryptomining operations. Failure to comply with emissions requirements at each benchmark will result in a US$12,000 penalty for each successive day of non-compliance.13


May 2, 2023, Montana Governor Greg Gianforte signed Senate Bill 178, a crypto friendly law granting protections to cryptocurrency and the cryptomining industry. S.B. 178 provides a right to mine cryptocurrency in the state and prohibits localities from enacting laws interfering with that right. Additionally S.B. 178 prohibits the local governments from prohibiting local governments from taxing digital asset mining or the use of cryptocurrency as a payment method, for excise tax purposes.14


Generally one of the more the crypto-friendly states, Texas has introduced a slew of legislation that would impact various sectors of the crypto industry, including cryptomining. Senate Bill 1751 and House Bill 591 directly impact cryptomining operations. On June 2, Texas Governor Greg Abbot signed H.B. 591, which provides tax exemptions on the sale of gas that would otherwise be flared or vented to datacenters, including cryptomining operations.15

On the other hand S.B. 1751 would impose a cap on how much cryptominers can participate in certain Texas demand response programs. Under these programs, cryptominers receive payment to curtail operations when energy demand is high, allowing more power to flow into the grid.16 S.B. 1751 passed in the Senate but is viewed by commentators as likely to fail in the House.17


O’Melveny & Myers will provide updates as new cryptomining legislation surfaces. For questions about cryptomining legislation or other digital-asset developments, please contact Monica Hwang or Wenting Yu.

1John Ruwitch and Emily Feng, How the U.S. benefits when China turns its back on Bitcoin, NPR, (February 24, 2022, 5:12 AM), https://www.npr.org/2022/02/24/1081252187/bitcoin-cryptocurrency-china-us.
2 Andrey Sergeenkov, China Crypto Bans: A Complete History, Coindesk, (March 9, 2022, 2:37 PM), https://www.coindesk.com/learn/china-crypto-bans-a-complete-history/. 
4Zhaoyin Feng, Why China’s bitcoin miners are moving to Texas, BBC News, (September 4, 2021), https://www.bbc.com/news/world-us-canada-58414555. 
6Judith L. Mernit, Bitcoin’s Intensive Energy Demands Are Sparking a Crypto Backlash, YaleEnvironment360, (June 21, 2022), https://e360.yale.edu/features/bitcoins-intensive-energy-demands-spark-a-crypto-backlash. 
7The DAME Tax: Making Cryptominers Pay for Costs They Impose on Others, White House Center of Economic Advisers, (May 2, 2023), https://www.whitehouse.gov/cea/written-materials/2023/05/02/cost-of-cryptomining-dame-tax. 8FACT SHEET: Climate and Energy Implications of Crypto-Assets in the United States, White House Office of Science and Technology Policy, (September 8, 2022), https://www.whitehouse.gov/ostp/news-updates/2022/09/08/fact-sheet-climate-and-energy-implications-of-crypto-assets-in-the-united-states/. 
9Senator Markey Introduces Legislation to Combat Energy-Intensive Cryptomining as it Strains Grid, Undermines U.S. Climate Goals, Ed Markey United States Senator for Massachusetts, (December 8, 2022), https://www.markey.senate.gov/news/press-releases/senator-markey-introduces-legislation-to-combat-energy-intensive-cryptomining-as-it-strains-grid-undermines-us-climate-goals. 
10Assembly Bill A7389C, New York State Senate, (November 22, 2022), https://www.nysenate.gov/legislation/bills/2021/a7389/amendment/c. 
12Sebastian Sinclair, Oregon Weighing Crypto Miner Carbon Crackdown, Blockworks, (January 11, 2023), https://blockworks.co/news/oregon-weighing-crypto-miner-carbon-crackdown.
14Senate Bill 178, Montana State Senate (May 2, 2023), https://legiscan.com/MT/text/SB178/2023. 
15House Bill 591, Texas House of Representative, (June 2, 2023) https://legiscan.com/TX/text/HB591/id/2809702/Texas-2023-HB591-Enrolled.html. 
16Senate Bill 1751, Texas State Senate, (April 24, 2023) https://legiscan.com/TX/text/SB1751/2023. 
17Eliza Gkritsi, Texas Senate Passes Bill to Limit Bitcoin Miners' Participation in Demand Response Programs, Coindesk, (April 12, 2023), https://www.coindesk.com/policy/2023/04/12/texas-senate-passes-bill-to-limit-bitcoin-miners-participation-in-demand-response-programs. 

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Monica Hwang, an O'Melveny partner licensed to practice law in Texas, Wenting Yu, an O'Melveny partner licensed to practice law in California and New York, William K. Pao, an O'Melveny partner licensed to practice law in California, and Connor Corbitt, an O'Melveny associate licensed to practice law in Texas, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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