One obstacle to large-scale bitcoin mining is finding enough cheap energy to run the huge, power-hungry computer networks that create and process cryptocurrency. A mining operation in central New York City has come up with a new solution that has alarmed environmentalists. It uses its own power station.
Greenidge Generation operates a once-dormant plant near the shore of Seneca Lake in the Finger Lakes region to produce approximately 44 megawatts to run 15,300 computer servers, as well as additional electricity that it sends to the power grid of the state. The megawatts dedicated to Bitcoin could be enough to power more than 35,000 homes.
Proponents call it a competitive way to mine increasingly popular cryptocurrencies, without depleting the existing power grid.
Environmentalists see the plant as a climate threat.
They fear a wave of resurrected fossil fuel power plants that pump greenhouse gases more for private profit than for the public good. Seeing Greenidge as a test case, they are asking the state to refuse the renewal of the plant’s air quality permit and to put a stop to similar projects.
“The current state of our climate demands action on cryptocurrency mining,” said Liz Moran of Earthjustice. “We are jeopardizing the state’s ability to meet our climate goals, and we are preparing the ground for the rest of the country accordingly. ”
The former coal-fired power station, located in a tourist region known for its glacial lakes and Riesling wines, was converted to natural gas by Greenidge and began generating electricity in 2017. Bitcoin mining at the he factory, with a capacity of 106 megawatts, started in earnest the past year. The company said it is “bringing a part of the world’s digital future” to upstate New York.
“For decades this region was told it would see new industries and opportunities,” Greenidge said in a prepared statement. “We have really achieved this and we are doing it fully within the framework of the state’s high environmental standards. “
Bitcoin miners unlock bitcoins by solving complex and unique puzzles. As the value of Bitcoin increases, the puzzles become more and more difficult and require more computing power to solve them. Estimates of the amount of energy used by Bitcoin vary.
Greenidge said it mined 729 bitcoin over a three-month period ending September 30. The value of the cryptocurrency fluctuates and on Friday one bitcoin was worth over $ 59,000.
Opponents of the plant suspect Greenidge of pulling on a bait and switch, asking to operate a power plant but considering operating a mining operation that consumes more power from the plant.
Greenidge says mining was not part of the plan when the plant came back online and notes that it continues to provide electricity to the grid. From January to June, Greenidge said it used 58% of its electricity for mining.
Supporters see it as an economic boon to a part of upstate New York that could use this aid. Douglas Paddock, chairman of the Yates County Legislature, said in a public hearing this week that the plant had created 45 high-paying jobs and made a “significant contribution” to the region through tax payments and capital investments.
Some opposition to the plant focuses on the potential effects of its taking water from Seneca Lake. But air quality issues have taken center stage as the state’s Department of Environmental Conservation reviews the plant’s air emission permits.
Greenidge said it is in compliance with its permits and that the plant is 100% carbon neutral, through the purchase of carbon offsets, such as forestry programs and projects that capture methane from landfills.
Opponents say the plant is undermining the state’s efforts to significantly reduce greenhouse gas emissions over the coming decades under its 2019 climate law.
A grand coalition of environmental groups and other organizations this week called on Governor Kathy Hochul to deny Greenidge’s air permit and take similar action to prevent an existing factory near Buffalo from becoming a mining site. The coalition wants Hochul to set a “national precedent” and enact a statewide moratorium on energy-intensive “proof-of-work” cryptocurrency used by bitcoin miners.
Environmentalists estimate that there are 30 factories in New York City that could be converted into mining operations.
“I really think more than anything, this plant is an important test of whether the state’s climate law is really worth anything,” said Judith Enck, who served as EPA’s regional administrator for the Northeast. United States under President Barack Obama.
Senators Chuck Schumer and Kirsten Gillibrand separately asked the Federal Environmental Protection Agency to monitor.
Across the country, other power plants are used for mining cryptocurrency under different types of arrangements.
In Venango County, Pennsylvania, a power plant that converts waste coal into electricity is used to mine bitcoin and can supply electricity to the grid when needed. Stronghold Digital Mining plans to replicate this type of operation at two other sites in Pennsylvania.
And in Montana, a coal-fired power plant now supplies 100% of its power to Marathon Digital Holdings for bitcoin mining under a power purchase agreement.
“We had already done what a lot of miners do, which is you find an industrial building, set it up for mining, and then you take out the electricity from the grid,” said Fred Thiel, CEO of Marathon. “And we wanted to reverse that model because we knew there were a lot of underutilized sources of power generation in the United States.”
Thiel said harmful emissions are low due to the quality of the coal and pollution controls, and the plant will be carbon offset by the end of next year. He said his company is focused on the transition to renewable energy, saying cryptocurrency miners can provide crucial financial incentives to build cleaner energy projects.
New York State has yet to make a decision on Greenidge’s permits.
Greenidge said that even though the plant was operating at full capacity, its potential emissions were equivalent to 0.23% of the state’s greenhouse gas reduction target for 2030.
However, state environment commissioner Basil Seggos tweeted last month that “Greenidge has failed to demonstrate compliance with New York’s climate law” based on the objectives of that law.
“New York State is at the forefront of climate change,” Seggos said in a prepared statement, “and we have great concerns about the role that cryptocurrency mining may play in generating emissions. additional greenhouse gases “.