Tusk Strategies also represented Uber when the car-sharing service launched in New York City in 2011, and Soufer said the parallels are clear: “If you want to have a role in shaping the trajectory of crypto regulation — not just on the state level, but also on the federal level — you need to engage and demystify the space.”
Energy Use
There’s been little indication on where New York Governor Kathy Hochul stands on crypto — whether it be front-office cryptocurrency operations or bitcoin mining. Crypto businesses say one potential bright spot is Adrienne Harris, the former Obama Administration official that Hochul named as the state’s new superintendent of the Department of Financial Services, New York’s top regulator for the industry. Harris served as a board member for the Digital Dollar Foundation, a group advocating for a U.S. central bank digital currency.
So far, most of the attention in Albany has focused on the environmental impact of bitcoin mining, an energy-consuming, lightly regulated practice that has boomed on U.S. shores since China’s 2021 crypto-mining ban.
In a closely watched case seen as a bellwether for how strictly the state might regulate crypto mining, New York’s Department of Environmental Conservation is expected to issue a key decision in March on whether to continue to allow mining operations at the formerly decommissioned power plant operated by Greenidge Generation Holdings Inc.
Located on Seneca Lake in New York’s Finger Lakes region, Greenidge is a coal power plant bought by private equity firm Atlas Holdings LLC that was turned into a natural gas-burning plant. By 2020, it became a 24-hour Bitcoin-mining operation. The plant has applied to renew an air-emissions permit and environmental activists and the cryptocurrency industry have been monitoring the public debate.
This “relatively new, little understood industry is destroying our climate because it’s so energy intensive,” said Yvonne Taylor, vice president of Seneca Lake Guardian, an environmental activist group. “Outside speculators are flocking to New York because it’s like the Wild West here without any oversight,” she said.
There’s also been extensive lobbying on legislation that would impose a moratorium on all crypto-mining operations statewide, as well as more than 20 bills introduced as of mid-February related to the industry on topics ranging from fraud to the use of blockchain technology in elections. There were 16 crypto-related bills introduced in New York in all of 2021.
In a sign of the divergence of political support, Mayor Adams this month proclaimed that “I support cryptocurrency, not crypto mining,” in an appearance in front of state lawmakers. And businesses without direct mining operations are concerned the conflicts over mining will spill over into other parts of the business, such as trading and other front-office businesses.
“Mining sucks up all the oxygen and crypto gets defined by mining,” said Soufer, of Tusk Strategies.
Charm Offensive
Crypto businesses outside of mining say they view their lobbying efforts as a pre-emptive strike. “It is for us to be involved as regulation continues to be developed and created,” said Lule Demmissie, chief executive officer of eToro USA, an Israel-based company that’s set to go public through a SPAC merger with Betsy Cohen-backed FinTech Acquisition Corp. V.