One of the biggest obstacles to large-scale bitcoin mining is finding enough cheap energy to run the enormous, power-eating computer arrays that create and transact cryptocurrency. A novel solution that uses its power plant came from central New York but has reportedly alarmed environmentalists.
Near the shore of Seneca Lake in the Finger Lakes region, Greenidge Generation runs a once-mothballed plant to produce about 44 megawatts to run 15,300 computer servers, and additional electricity is sent into the state’s power grid. More than 35,000 homes will be supplied with power from megawatts dedicated to Bitcoin.
A competitive way to mine increasingly popular cryptocurrencies without putting a drain on the existing power grid is how proponents name it. According to environmentalists, the plant is a climate threat.
Bitcoin Mining Power Plant Raises Political Issues
Pumping out greenhouse gasses more for private profit than the public good is the general fear from a possible wave of resurrected fossil-fuel plants. The state needs to deny the renewal of the plant’s air quality permit and put the brakes on similar projects in environmentalists’ positions.
“The current state of our climate demands action on cryptocurrency mining,” said Liz Moran of Earthjustice. “We are jeopardizing the state’s abilities to meet our climate goals, and we are setting the stage for the rest of the country as a result.”
Greenidge converted the former coal plant to a natural gas plant that was situated in a touristy region known for its glacial lakes and Riesling wines, wherein 2017 it began producing electricity. With a capacity of 106-megawatt, Bitcoin mining started in earnest last year.
“For decades, this region has been told it will see new industries and opportunities,” Greenidge stated boldly. “We are making it happen, and doing it fully within the state’s nation-leading high environmental standards.”
By solving complex, unique puzzles, Bitcoin miners unlock bitcoins as a reward. The puzzles become increasingly more difficult, and it requires more computer power to solve them as the value of Bitcoin goes up. How much energy Bitcoin uses gives various estimates.
Greenidge reported mining of 729 bitcoins over the three months ending Sept. 30. Fluctuations in the value of cryptos are natural where bitcoin recently reached over $68,000.
Greenidge applied to run a power plant, but is now operating a mine that is taking up more of the plant’s power, which is what frustrated opponents report.
When the plant returned online, mining was not part of the plan, said Greenidge, and notes they continue to provide power to the grid. It used 58% of its power for mining from January through June, Greenidge said.
Some upstate New York supporters see it as an economic boom. Douglas Paddock, the chairman of the Yates County Legislature, testified at a public hearing this week. He convincingly said that the plant has brought 45 high-paying jobs and made a “significant contribution” to the area through tax payments and capital investments.
The potential effects of water withdrawals from Seneca Lake are the voice of some opposition, and more serious air quality issues have taken center stage. As a result, the state Department of Environmental Conservation reviews the plant’s air emission permits.
Greenidge Says Power Plant is 100% Carbon Neutral
The plant is 100% carbon neutral and in compliance with its permits, said Greenidge, thanks to the purchase of carbon offsets, such as forestry programs and projects that capture methane from landfills.
The state’s efforts to dramatically slash greenhouse gas emissions in the coming decades under its 2019 climate are in vain, according to opponents’ claims.
A large coalition of environmental groups and other organizations this week asked Governor Kathy Hochul to deny Greenidge’s air permit and take similar action to prevent existing facilities near Buffalo from being turned into a mining facility. The coalition asks and wants Hochul to set a “national precedent” and impose a state moratorium on energy-intensive cryptocurrency “proof of work” for Bitcoin miners.
Estimates show environmentalists say about 30 plants in New York could be converted into mining operations.
“I think more than anything, this plant is a significant test of whether the state’s climate law is worth anything,” said Judith Enck, who served as the EPA’s regional northeastern U.S. administrator under President Barack Obama.
The federal Environmental Protection Agency was asked by Sens. Chuck Schumer and Kirsten Gillibrand to exercise oversight.
Under various types of agreements, other power plants are used to extract cryptocurrencies across the country.
In Venango County, Pennsylvania, a power plant that converts waste coal into energy is used to generate bitcoins and can power the grid when needed. Stronghold Digital Mining plans to replicate this type of operation at two other Pennsylvania locations.
And in Montana, a coal-fired power plant is now supplying 100% of its energy to Marathon Digital Holdings for Bitcoin mining as part of an energy purchase agreement.
“We used to do what a lot of miners do, which is find industrial buildings, prepare them for extraction, and then sign power supply contracts,” said Marathon CEO Fred Thiel. “And we want to change this model because we know there are a lot of untapped energy sources in the US.”
Thiel said harmful emissions are low due to coal quality and pollution, and the facility will offset CO2 emissions by the end of next year. He said his company is focused on shifting to renewable energy and said cryptocurrency miners could provide important financial incentives to build more clean energy projects.
New York State has not yet made a decision on Greenidge’s approval. Greenridge said that even when the facility is at full capacity, its potential emissions are 0.23% of the government’s 2030 greenhouse gas emission reduction target.
However, State Environment Commissioner Basil Segos tweeted last month that “Greenridge has failed to demonstrate compliance with the New York Climate Act,” based on the goals set out in the bill.
“New York is a leader on climate change,” Seggos said in a statement, “and we have some major concerns about the role of cryptocurrency mining in generating additional greenhouse gas emissions.”