In upstate New York’s Finger Lakes region, where a private equity firm set up shop to enter the Bitcoin sweepstakes, the threat that cryptocurrency poses to the climate has become crystal clear.
Here’s the backstory.
It’s another anti-regulatory move toward privatization—and one that has damaging public consequences.
In 2014, Connecticut-based Atlas Holdings bought a mothballed, coal-fired electric power plant on the shores of Seneca Lake. Three years later, the facility—Greenidge Generation—was restarted as a natural gas-fired plant. Local residents expected it would just be used to provide electricity at peak user times. The plant operated at only 6 percent capacity in 2019.
But by August 2020, Forbes magazine described Greenidge as “one of the largest” Bitcoin cryptocurrency facilities in the United States. Catering to the crypto craze, the plant has grown at a rapid rate, spewing greenhouse gases into the atmosphere and using its energy to power thousands of high-speed computers.
All this has sounded alarms, not only because the Greenidge facility presents a new environmental peril to the Finger Lakes, but also because it sets a precedent for the state’s forty-nine retired or underused power plants that could be targeted for cryptocurrency use. Meanwhile, Greenidge has begun expanding its money-driven Bitcoin operations into other states.
Kelly Gampbell
Yvonna Taylor
“We are in the middle of a climate crisis. Burning more fossil fuel and emitting more greenhouse gases into the atmosphere to make virtual currency is literally insane,” says Yvonne Taylor, vice president of the Seneca Lake Guardian, a nonprofit “dedicated to preserving and protecting the health of the Finger Lakes.”
A Seneca Lake resident, Taylor has been active in environmental causes for more than a decade. She and her partner, Joseph Campbell, formed Gas Free Seneca, which helped to lead the successful fight against using caverns around Seneca Lake to store fracked natural gas.
Now environmentalists face a new Goliath. Consider the Greenidge plant’s own statistics: 374,814 metric tons of greenhouse gases were emitted in 2020. Even more—520,336 metric tons—are projected to be emitted this year, as well as for each of the next four years. The annual total emissions caused by the Greenidge plant is projected to reach 952,958 metric tons for 2022, and each year through 2026.
Photo provided
Robert Howarth
New York’s 2019 Climate Leadership and Community Protection Act rightly requires that the greenhouse gas totals of New York plants include emissions created by the out-of-state production and transmission of the natural gas they use.
Robert Howarth, professor of ecology and environmental biology at Cornell University, says that since New York produces so little natural gas, almost all the natural gas used at Greenidge is fracked gas from the Marcellus Shale formation in Pennsylvania, and possibly from Ohio and West Virginia.
“If we are to meet the goals of the [act],” Howarth says, “we have to reduce the use of natural gas statewide.”
The vast majority of people who spoke against renewal of the facility’s air permits
at the state Department of Environmental Conservation’s October 13 hearing opposed the repurposing of the Greenidge facility for Bitcoin.
“Cryptocurrency presents a huge threat for communities that have old power plants.”
“The investors will get the profits and we will get the damages,” said Paula Fitzsimmons, who with her husband owns a winery near the plant. She is a veteran of a previous fight against turning the shores of Seneca Lake into an outpost for the natural gas industry.
Added Amber Ruther of the Syracuse-based Alliance for a Green Economy, “It’s literally allowing people to trade pollution for profit at an exponential rate and that is a slippery slope that we and our planet cannot afford.”
Photo provided
Greenidge power plant on shores of Seneca Lake.
As with other cryptocurrencies, Bitcoin transactions are conducted outside the banking system, without the backing and oversight of government. It’s another anti-regulatory move toward privatization—and one that has damaging public consequences.
Bitcoins are created, or “mined,” by an energy-intensive process called “proof of work.” “Miners” from around the world, using specialized computers, compete to solve complex mathematical puzzles to verify these virtual transactions. The winners are rewarded with Bitcoins and transaction fees.
The number of these powerful computers at Greenidge sharply increased from about 6,900 to roughly 17,300 over the past year. The total is slated to reach about 49,000 by September, according to Greenidge.
Worldwide, Bitcoin consumes about half as much electricity as all of Great Britain. And using Bitcoin equipment creates an estimated thirty-one metro kilotons of e-waste globally.
Nevertheless, Greenidge received the green light from the town of Torrey to construct four buildings to expand operations at the plant’s site in the village of Dresden. Environmental groups and local residents filed a petition seeking to void the site approval, arguing that a proper environmental review was not done. They recently returned to court seeking a preliminary injunction because Greenidge has started the groundwork for the buildings.
Photo provided
Rachel Treichler
The Greenidge facility is allowed by permit to suck in 139 million gallons from the lake each day and discharge 134 million gallons of the heated water into an outlet that empties back into the lake.
Greenidge has yet to put in required protective screening, seven feet in diameter, to prevent fish from entering the long intake pipe. The New York Department of Environmental Conservation has given Greenidge until the end of September to comply.
“Cryptocurrency presents a huge threat for communities that have old power plants,’’ says Rachel Treichler, an environmental lawyer from the Finger Lakes region. “We are at the forefront of this problem.”
With China banning crypto mining last year, the United States has become the Bitcoin mining center, with New York duking it out with several other states—including Texas—for the dubious crown of having the most Bitcoin activity.
“If all the miners who were kicked out of China come here or go to other countries that allow it, we will blow through the goals of the Paris greenhouse gas limits in no time,” says Mandy DeRoche, deputy managing attorney of the coal program for Earthjustice.
Greenidge claims that it is running “an entirely carbon neutral bitcoin mining operation.” But that’s only because it’s purchasing carbon offsets from a portfolio of greenhouse gas reduction projects. Carbon offsets allow a facility to keep polluting at high levels.
Photo provided
Water intake pipe for Greenidge power plant.
As Senator Elizabeth Warren, Democrat of Massachusetts, wrote in a December 2 letter to Greenidge CEO Jeffrey Kirt, “Your company claims carbon neutrality through the purchase of carbon offsets, but its Dresden facility is still putting hundreds of thousands of tons of carbon dioxide into the atmosphere that would not be emitted otherwise.”
The Climate Leadership and Community Protection Act commits New York State to reducing greenhouse gas emissions by 40 percent by 2030 and 85 percent by 2050 from 1990 levels. But the state’s electric generation sector, it says, is not eligible for carbon offsets.
While the Department of Environmental Conservation has yet to rule on the pending permits, the agency has said that “the applicant has not demonstrated that the project is consistent with the attainment of statewide [greenhouse gas] emission limits established in the Climate Act.”
A bill introduced by New York State lawmakers would impose a three-year moratorium on issuing permits to electric generating facilities that use fossil fuels and provide electricity for the proof of work process. It would put the brakes on this rush to Bitcoin while its impact is being reviewed.
“We need that information to protect the state and to protect our environmental goals,” says State Assemblyperson Anna Kelles, the bill’s chief sponsor.
To date, the Department of Environmental Conservation has given Greenidge loose reins.
At the October permit renewal hearings, Roger Downs, conservation director of the Sierra Club’s Atlantic Chapter, challenged Greenidge’s claim that little has changed since the air permits were first granted in 2016, before Bitcoin mining began.
The plant had forty-five employees as of last July and provides revenue to the town of Torrey. It also still sells electricity to the New York grid. But many who spoke out against the air permit renewals told of the need to protect the agriculture and tourism that drive the Finger Lakes economy.
“I love the phrases in their own website that talk about clean burning natural gas,” said David Ettman, representing the Seneca County Board of Supervisors at the October hearing. “Quite frankly, there is no clean-burning natural gas.”