The state Legislature in 2019 passed the Climate Leadership and Community Protection Act, which sets very specific and aggressive goals for the reduction of carbon dioxide emissions. It requires New York to reduce the release of greenhouse gas 40 percent by 2030 and no less than 85 percent by 2050, based on 1990 levels.
A significant threat to reaching those goals has emerged in the last two years, however: use of once-mothballed fossil fuel power plants to mine cryptocurrency.
The Finger Lakes is currently at the epicenter of the battle to regulate proof-of-work cryptocurrency, a specific type that uses extraordinary amounts of energy. The growth of cryptocurrency mining at the Greenidge Generating Station on the western shore of Seneca Lake, south of the village of Dresden in Yates County, has drawn media attention nationally as well as from outlets in China, Germany, Italy, and Japan. But until now it has drawn very little coverage in Rochester.
The environmental stakes are high. In addition to the impact on greenhouse gas emissions, cryptocurrency mining in the Finger Lakes poses hazards associated with rising water temperatures. Also potentially at risk is the region’s multibillion-dollar agritourism economy.
Concern about cryptocurrency mining is on the rise globally. China has taken drastic measures to cut its cryptocurrency mining due to energy and pollution impacts. And according to Bitcoin.com, in recent days financial and environmental regulators in Sweden have recommended that the EU ban POW mining.
From coal to crypto
The Seneca Lake facility since 2014 has been owned by private equity firm Atlas Holdings; it is operated by Greenidge Generation. It shut down as a coal-fired plant a decade ago. Since 2017, it has run a unit with a capacity of roughly 107 megawatts and is subject to several Department of Environmental Conservation permits; its application for renewal of its air permit that expired in September is currently with the DEC, with operations continuing during the review process.
The plant was retrofitted to run on natural gas and initially intended to sell power to the energy grid. However, in 2019 Greenidge began using the station for bitcoin mining. In 2020, the company says, 60 percent of the power generated was sent to the local energy grid, “helping to support up to 20,000 homes and businesses.” In the quarter ended Sept. 30, Greenidge mined 729 bitcoins, compared to 246 bitcoins in the third quarter of 2020 and 315 bitcoins in the second quarter of 2021. At midweek, the value of one bitcoin was around $60,410.
Last spring, Greenidge said its bitcoin capacity of 19 megawatts was expected to reach 45 megawatts this year and could hit 500 megawatts by 2025 as it expands here and elsewhere. It is eyeing states including South Carolina and Texas.
In a statement on its air permit renewal application, Greenidge maintains that it is “an upstate success story. We have spent years building an unequivocal record of environmental stewardship in the Finger Lakes, eliminating coal forever, complying fully with strict air and water permits, protecting aquatic life and launching what is believed to be the nation’s first and only 100 percent carbon-neutral cryptocurrency mining operation.”
Its Seneca Lake plant, Greenidge adds, is “a new economic engine bringing a piece of the world’s digital future to Upstate New York.”
What Greenidge did not state is the fact that its Seneca Lake facility operates within a loophole in New York’s environmental regulation the size of a power plant, and it has moved as fast as possible to solidify its position, reflecting a strategy that the bigger they are, the harder it will be to regulate them.
With abundant fracked gas available from neighboring states like Pennsylvania and Ohio, and 49 mothballed or underutilized power plants in New York, there is the potential for energy companies to make an astounding amount of money if they don’t have to pay for the short-term and long-term environmental consequences. (Another nearby power plant, in North Tonawanda, is in the process of being converted to POW cryptocurrency mining.)
Environmentalists in the Finger Lakes, seasoned by battles over gas storage and trash incinerators, have been joined by several state Assembly lawmakers who think this type of cryptocurrency mining is particularly threatening to the health of New York residents.
How cryptocurrency mining works
There are many different cryptocurrencies and each one uses a specific type of authentication to protect the security of the currency and its value. Proof-of-work was one of the first methods of authentication and has grown to dominate the cryptocurrency market with Bitcoin as the best-known example. As Investopedia explains, “Bitcoin miners run complex computer rigs to solve complicated puzzles in an effort to confirm groups of transactions called blocks; upon success, these blocks are added to the blockchain record and the miners are rewarded with a small number of bitcoins.” The New York Times estimates that Bitcoin mining consumes more electricity than entire countries such as Finland, accounting for nearly 0.5 percent of all electricity consumption worldwide.
Another well-known POW cryptocurrency, Ethereum, is in the process of transitioning from POW to proof of stake, to avoid the massive energy requirements of POW. Other forms of authentication also use a tiny fraction of the energy required by POW. A new currency, nano, says it uses one-six millionth the amount of energy to process transactions compared to Bitcoin.
The scale of the potential power usage and environmental damage due to POW cryptocurrency mining is so vast that it is difficult to grasp. Greenidge has announced the purchase of questionable carbon offsets, but to truly offset the environmental impact, it would need to buy $8 million of bagged ice every day to offset the thermal pollution of the 100 million gallons of heated water that are released into the Keuka Outlet and then into Seneca Lake every day. It would be cheaper for Greenidge to buy the Happy Ice factory in Fairport and then build dozens of additional factories to meet its daily requirement for ice.
Climate change already is a significant factor in warming air and water. The release of heated water might exacerbate the harmful algal blooms that have been getting worse throughout the Finger Lakes in recent years.
Greenidge’s air, water, and noise emissions are currently in compliance with its permits, but that’s because the DEC chose to renew old permits from the previous owners of the coal-powered plant that was operating at a small fraction of capacity due to lack of demand for electricity. While Greenidge is in compliance with these antiquated DEC permits, DEC Commissioner Basil Segos recently tweeted that “Greenidge has not shown compliance with NY’s climate law,” apparently referring to the CLCPA.
NYS is taking action on #ClimateChange. Today @NYSDEC released for public comment draft air permits for former coal plant turned bitcoin mine, Greenidge LLC. DEC has not made a final determination on the permits and Greenidge has not shown compliance with NY’s climate law./1 pic.twitter.com/PKozYCUIeQ— Basil Seggos🇺🇸 (@BasilSeggos) September 8, 2021
If Greenidge wanted to spend some of the millions of dollars it is making on reducing its environmental damage, the company could install a closed-cycle cooling system and use just a tiny fraction of the water it is allowed by permit to heat up to 108 degrees.
Tomorrow is the final day for submission of comments to the DEC regarding Greenidge’s application for a renewal of its Title V Air Permit. There will be simultaneous press conferences at 11 a.m. at the Geneva Visitor’s Center and in Albany to announce the approximate number of comments that have been submitted to the DEC and Gov. Kathy Hochul. This kind of permit renewal is usually a simple process, but the rapid expansion of Greenidge’s power production and the out-of-date pollution standards in its air permit should cause the DEC to closely examine this permit renewal.
Assemblymembers Anna Kelles and Steven Otis plan to again submit their legislation that would pause the expansion of POW cryptocurrency mining projects in New York until a full environmental impact assessment can be done. The state Senate passed legislation regarding POW mining last session, but concerns from the International Brotherhood of Electrical Workers union kept the Assembly from voting on that same bill. It makes sense that the electrical workers would like to get the 40 temporary installation jobs for Greenidge’s expansion and potentially other jobs at future power plant conversions, but it is up to the New York lawmakers to vote based on what is best for the state.
The expansion of cryptocurrency mining threatens the 58,000 jobs and more than $3 billion in economic benefits for New York from agritourism in the Finger Lakes wine region. There won’t be any power plants converted to cryptocurrency mining in Napa and Sonoma. The brilliant future of Finger Lakes wine region must be appreciated and protected from power plant expansions that carry lots of risk and few rewards.
Michael Warren Thomas has hosted a series of radio shows on the Finger Lakes region. In addition, he has been an analyst for the Center for Governmental Research, a landscape designer and natural lawn care provider, an urban forestry economist, and horticulturalist for the city of Rochester