How Bitcoin Mining Keeps Old Fossil-Fuel Plants Alive

“It’s a gold rush!”

Omar Marques/SOPA Images/ZUMA

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This story was originally published by Grist and is reproduced here as part of the Climate Desk collaboration.

One decade and $1 trillion after the debut of Bitcoin, the environmental footprint of “mining” the cryptocurrency is still hotly contested. What’s certain, however, is that the amount of electricity the process requires is growing at a breakneck speed. Each time transactions are added to Bitcoin’s digital ledger, they have to be verified by its network, which requires “miners” to devote huge quantities of computational power to solving cryptographic problems. As more miners join the network—lured by the skyrocketing value of the bitcoin they receive in exchange for their work—the puzzles get harder, requiring ever greater amounts of processing power, and thus electricity, to solve.

Bitcoin mining is now estimated to gobble up more electricity than many entire countries. Since 2019, when the University of Cambridge’s Centre for Alternative Finance placed the cryptocurrency’s power needs ahead of Switzerland’s, its consumption has more than doubled, surpassing that of Sweden. The energy used by the Bitcoin network in a single year could power all the tea kettles in the United Kingdom for over three decades.

Adding so much demand to the world’s electricity grids is risky, especially at a time when the window to meaningfully cut greenhouse gas emissions is rapidly closing. Proponents of Bitcoin would have you believe that many or even most mining operations are in far-flung locations using renewable energy that otherwise would have gone to waste. Bitcoin miners have an incentive to keep electricity costs low, they reason, so they’re likely to seek the cheapest electricity possible.

Jack Dorsey and Elon Musk, whose respective companies Square and Tesla have invested heavily in Bitcoin, claim the cryptocurrency will actually hurry the green energy transition by steering investment into renewables. A paper prepared by Square predicts that electricity producers and Bitcoin miners will soon become one and the same.

On the sleepy shores of Seneca Lake in Dresden, New York, that prediction is already being realized. Greenidge Generation, a former coal power plant that converted to natural gas and began a Bitcoin mining operation, is positioning itself as part of the clean energy future. The company’s promotional materials describe a “clean” and “environmentally-sound” plant with a “unique commitment to environmental stewardship.

There’s just one problem: If it weren’t for Bitcoin, there would almost certainly be no reason to run the power plant in Dresden at all. Without the revenue from mining, Greenidge would have no reason to spew hundreds of thousands of tons of carbon dioxide from the plant’s stacks, discharge hundreds of billions of gallons of hot water into a nearby trout stream, or pipe in and burn billions of cubic feet of fracked natural gas.

In fact, the plant was shut down in 2011 because there wasn’t enough regional energy demand to justify the operating costs. Its owners filed for bankruptcy and told the state that the plant’s closure was permanent. After belching noxious fumes and dumping toxic coal ash into a nearby landfill for seven decades, the plant was poised to be remediated and reused.

And that’s sort of what happened, in 2014, when Atlas Holdings, a private investment firm based in tony Greenwich, Connecticut, purchased Greenidge. After several years of lobbying New York state officials—and some well-timed donations to Gov. Andrew Cuomo—the company won a $2 million regional economic development grant to convert the plant to run on natural gas.

When Greenidge applied for permits to restart operations, it claimed it would be generating power to meet existing electricity demand. In 2016, the New York Department of Environmental Conservation, or DEC, concurred and cited the fact that the “plant itself will not create a new demand for energy” as part of the agency’s justification for letting the plant skip the normal requirement to produce an environmental impact statement.

But when Greenidge reopened in 2017, there wasn’t any more demand than there had been when it shut down. By 2019, the plant was no longer producing power for the public at all. In an attempt to claw back the tens of millions that Atlas invested to convert the plant to natural gas, Greenidge turned to mining Bitcoin.

By March 2020, the plant was reportedly using over 14 megawatts of power, enough for roughly 9,000 homes, to mine around $50,000 worth of Bitcoin per day. As of this writing, that same amount of Bitcoin is worth about $300,000. The plant is now one of the largest cryptocurrency mines in the country, and it’s angling to get even bigger.

As Greenidge increased its mining capacity last year, there was a corresponding jump in its contributions to global warming. The plant’s greenhouse gas emissions increased nearly tenfold from 2019 to 2020, according to DEC records obtained by the Committee to Preserve the Finger Lakes, one of several local environmental groups that have risen up in opposition to the plant.

The equivalent of over 220,000 metric tons of carbon dioxide were emitted over the course of last year, a volume comparable to putting nearly 50,000 new cars on the road. That’s just a fraction of the 580,000 metric tons the plant is currently permitted to emit annually, and the nearly 1 million metric tons it could release every year if operating at full capacity. And since the plant’s growing appetite is driven entirely by cryptocurrency, these emissions can’t be written off as the price of providing heat and power to homes or businesses.

Greenidge isn’t even close to done expanding. In late March, the company revealed plans to merge with Support.com, a publicly traded tech company. In its announcement, Greenidge said it wants to more than double its mining capacity on Seneca Lake by July—and to double it again by the end of 2022, at which point it will total 85 megawatts. The company is not a power plant with a side hustle, but rather a “bitcoin mining company with a wholly-owned power plant.”

Greenidge also said that the company plans to replicate its vertically integrated model—cryptocurrency mining at the source of energy production—at other power plants, with a goal of at least 500 megawatts of combined mining capacity by 2025. To accomplish that, the company would have to acquire and open at least four other power plants of similar capacity. They probably won’t have trouble finding them: National environmental nonprofits Earthjustice and the Sierra Club have already warned that nearly 30 power plants in upstate New York could be used for similar purposes. Atlas Holdings itself partially owns five power plants in New Hampshire that have more than 1,000 megawatts of combined capacity. Like Greenidge before its pivot to Bitcoin, they’re only used at times of peak demand.

Others are already following in Greenidge’s footsteps. In April, a cryptocurrency mining company called Digihost moved to acquire a 55-megawatt natural gas-fired plant in Niagara County, New York. It could theoretically happen at any aging fossil fuel plant around the country: A source of dirty energy that has outlived its profitability could find a second life as a Bitcoin mining operation. Contra Dorsey and Musk, there’s no incentive for Bitcoin miners to purchase or invest in renewable energy if it’s less expensive to produce their own by burning fossil fuels at dirt cheap plants that nobody else wants. 

“It’s a gold rush,” observed Vinny Aliperti, the owner of a winery 10 miles up the road from Greenidge. “We’re just the first, but they’re going to be coming after all these old power plants.”

Although emissions from Bitcoin mining have global consequences, many of the locals opposing Greenidge are equally concerned about its effects on water quality and wildlife. They’ve enumerated their issues with Greenidge in a recent lawsuit against the Town of Torrey (within which the village of Dresden is located), the Torrey Planning Board, and Greenidge itself. This lawsuit is only the latest legal action organizations like the Committee to Preserve the Finger Lakes have taken to try to halt the plant’s operation and proposed expansion.

In late March, Phil and Linda Bracht, two of the 30 petitioners on the lawsuit against Torrey, the county planning board, and Greenidge, took me and another petitioner, Carolyn McAllister, out in their boat to get a look at the plant from the water. All three live on Seneca Lake, just a mile from Greenidge.

The first part of the facility to catch the eye is its giant intake pipe, which is 7 feet in diameter and extends further than the length of two football fields from the shore over the water, like an elevated train to nowhere, before dropping below the lake surface. This is where Greenidge can draw up to 139 million gallons of fresh water per day to cool the plant.

Like all thermoelectric power plants, Greenidge uses steam to spin the turbines that produce electricity, but the steam has to be condensed back to water by exchanging heat with the fresh water before it can be reused. Once-through cooling systems like this—where water is used once and then expelled at a higher temperature—require vast amounts of water, with consequences for both wildlife and water quality.

Intake pipes like this one will suck in water, plants, and animals indiscriminately, resulting in fish, larvae, and other wildlife becoming either “impinged”—caught or mangled by the screens at the pipe’s entrance—or sucked into the cooling system entirely in a process called “entrainment.” A 2011 Sierra Club report put the matter less technically, describing once-through cooling systems as “giant fish blenders.”

Greenidge’s former owners once commissioned an engineering study that estimated that the plant impinged or entrained nearly 10,000 fish and crayfish annually in 2006-2007, while an additional 592,000 eggs, larvae, and juvenile fish were entrained every year. The federal Clean Water Act requires facilities that withdraw more than 2 million gallons a day for cooling purposes to, at minimum, cover intake pipes with protective screens to reduce these harms, but New York’s DEC gave Greenidge five years to comply, meaning its pipe won’t have screens until late 2022.

After the water is circulated through the plant, it’s expelled through a 7-by-10-foot concrete tunnel into a canal that flows into Keuka Lake Outlet, a trout stream that empties into Seneca Lake and has been designated by the DEC as a fishery requiring special protection. According to a statement to the court from Lori Fischline, another petitioner against Greenidge who often kayaks up the Outlet, the area has been overtaken by “sludge, algae, insects, dead fish, and foul smells.”

Greenidge is permitted to discharge up to 134 million gallons of water daily at temperatures that range from 108 degrees Fahrenheit in the summer to 86 degrees F in the winter. Given that the lake’s normal surface temperatures range from just 32 to 70 degrees F, depending on the season, the potential for ecological havoc is high.

Seneca Lake is known as the lake trout capital of the world—it’s the site of the annual National Lake Trout Derby—but water temperatures greater than 68 degrees F can impede the fishes’ development and increase mortality. In recent years, fishers have reported fewer and smaller catches on the lake. John Halfman, a professor of geoscience and environmental studies at Hobart and William Smith College on the northern end of Seneca Lake, says the size of the biggest fish caught in the derby has been steadily decreasing, while the time it takes to make a catch is increasing. Michael Black, a petitioner and fisherman going on his 50th summer living on the lake, said he used to catch between 60 and 100 lake trout each year from his dock south of Greenidge. In the last three years combined he’s caught just four. While there are multiple reasons fish might be suffering, Black worries that hot water discharges are exacerbating the threats they face.

Tiffany Garcia, a freshwater ecologist at Oregon State University, wrote a letter to the Town of Torrey raising similar concerns about the effects of hot water discharges on the larger lake ecosystem. “You don’t want to increase temperatures artificially in water bodies that are already going to be suffering from or experiencing increased water temperatures from climate shifts,” she told Grist by phone. She compared the lake’s resiliency to a rubber band and said there’s no telling when additional natural and unnatural stressors will cause that resiliency to snap.

Residents fear that warmer waters will also increase the likelihood and severity of harmful algal blooms, or HABs, near Greenidge. While the presence of blue-green algae or cyanobacteria is normal in lakes, a small number of these organisms produce potent toxins that can be dangerous or even fatal for people and other animals. Under the right conditions—which include lots of sun, still water, and, crucially, heat—these algae can explode in vast, dangerous blooms that are becoming increasingly common in the U.S.

Gregory Boyer, the director of the Great Lakes Research Consortium at the State University of New York, studied the effect of artificially increasing water temperature by just 2 degrees on Lake Champlain. That small change resulted in a surge of bacteria growth, with toxic species of bacteria increasing to a greater degree than nontoxic species.

In earlier lawsuits challenging permits the DEC issued to Greenidge, Boyer submitted affidavits on behalf of local environmental groups saying that the large discharges of heated water from Greenidge could increase HABs in the area and should be studied further. Gary McIntee, who lives just south of Greenidge, told me that the water flowing down the Outlet is often flush with nutrient-rich runoff from farms as well as discharge from a wastewater treatment plant upstream, creating an ideal mix for HABs.

Many people who live near Seneca Lake, including petitioners like Black and McIntee, use water drawn directly from the lake in their homes: to shower, to wash clothes and dishes, to water their gardens or—in the case of the region’s dozens of wineries—even their vineyards. HABs would render their only source of running water unusable. As the DEC points out, not even boiling, chemical disinfectants, or water filters will protect people from HABs and their associated toxins.

HABs can also overwhelm industrial water filtration systems, temporarily rendering public water undrinkable. And as winemaker Vinny Aliperti pointed out, algal blooms keep the tourists away. More than anything, many locals object to being subject to these ecological risks for a power plant that’s not actually providing them needed electricity in return.

Greenidge Generation vigorously denies that its plant is having an adverse impact on the environment. It also claims it’s once again producing power for the grid. “Greenidge is a unique success story,” Mike McKeon, a lobbyist and crisis communicator retained by Greenidge, told Grist in a statement. “Today, Greenidge is a clean, reliable source of power for thousands of homes and businesses in upstate New York and is home to a new data processing center mining bitcoin that is already paying enormous dividends to our community at large.”

In response to concerns about impingement and entrainment in the cooling system, Greenidge has said that the risk is mitigated by variable speed drives recently installed on the facility’s water pumps, which lower the speed of water intake—making it easier for fish to swim away and escape. Those drives, however, can be turned off whenever the plant needs maximum water flow. Greenidge also affirmed that it is on schedule to install protective screens by 2022. As for the effect of hot water discharges on fisheries, the company counters that the designated Keuka Lake Outlet trout area is upstream from Greenidge and won’t be affected. However, although there are specific fishing regulations upstream from the Greenidge discharge canal, the lower part of the Outlet is also a designated trout stream; this explanation also does not account for the trout that live in Seneca Lake itself.

The company’s response to residents’ concerns about HABs is to say there were no HABs within 4 miles of the plant last year, so it couldn’t possibly cause them. However, as Boyer told me, the number of HABs was down across the region in 2020, likely because of high winds over the summer. He explained HABs only explode when all necessary conditions are met, so this one data point doesn’t prove Greenidge won’t help cause them in the future.

Finally, Greenidge reiterated that its activities are all within the limits set by its permits from the DEC and the U.S. Environmental Protection Agency, or EPA, which determine how much water the plant can withdraw and discharge and at what temperatures, as well as the plant’s air emissions limits. The DEC verified that Greenidge is in compliance with its permits and insisted that it “strictly oversees” the plant’s activities. Greenidge often boasts that these permits are “uniquely strong.”

How Greenidge received those “uniquely strong” permits is a point of longstanding interest to Peter Mantius, a journalist who resides in Watkins Glen, a town at the southern tip of Seneca Lake. Mantius has been covering Atlas Holdings and Greenidge since at least 2017, carefully documenting their sustained lobbying of state officials, as well as contributions to Andrew Cuomo’s reelection campaigns totaling at least $120,000.

Atlas’ lobbying began in 2013, before the firm even bought the plant. Through the law firm Hiscock Barclay, Atlas enlisted a lawyer who had previously been the general counsel at the DEC. That lawyer wrote his former employer on his new client’s behalf, requesting that Greenidge not be treated as a “new” facility under the Clean Air Act, which would avoid the stricter environmental review to which new or significantly altered air pollution sources are otherwise subject.

That same year, the firm and its principals began donating to Governor Cuomo’s reelection campaign, beginning with a $25,000 donation from the company in March. In December, Timothy Fazio and Andrew Bursky, Atlas’ managing partners, each contributed an additional $25,000 on the very same day. Fazio donated another $20,000 in January 2014, shortly before his firm bought the plant. (When asked for comment on these donations, Cuomo’s senior advisor Rich Azzopardi told Grist that “no contribution of any size has any impact or plays a role in any official action, period.”)

In March 2014, the plant hired McKeon, a lobbyist at Mercury Public Affairs and the founder and former executive director of Republicans for Cuomo, which organized bipartisan support for the now-governor during his first run for the office. The plant initially paid a monthly retainer of $20,000 to secure his services. As Mantius has reported, McKeon’s primary activities were lobbying the executive chamber and, for a time, the New York State Legislature. Over the next few years, Greenidge paid Mercury at least $500,000.

In March 2015, Atlas representatives met with top state officials, including Joe Martens and Basil Seggos, the former and current commissioner of the DEC, as well as Thomas O’Mara, a member of the State Senate who also happened to be a partner at the law firm retained by Greenidge Generation. Although details of their conversation are not public, McKeon and O’Mara both told Mantius that they discussed the “new source review” process under the Clean Air Act. (O’Mara also claimed that he was unaware of his conflict of interest going into the meeting.)

Despite these efforts, Greenidge was ultimately subject to stricter treatment as a “new source” under the Clean Air Act, but only after the EPA took the DEC to task for trying to reissue the plant’s air permits after nearly five years of inactivity. “In issuing the proposed permit, NYSDEC did not adequately explain why Greenidge’s reactivation would not constitute a major modification,” the EPA wrote. “NYSDEC relied on Greenidge’s conclusion that the reactivation is not a major modification.”

However, Greenidge’s lobbying paid off in other ways. To start, they secured a $2 million grant to help convert the plant to natural gas through an “upstate revitalization” program meant to stimulate the region’s economy and create jobs. More significantly, when the DEC renewed the plant’s water withdrawal and discharge permits in 2016, the agency waived the normal requirement that the company complete a comprehensive environmental impact statement. The agency essentially reasoned that, since the plant was already built and was resuming operations using a cleaner fuel than coal, it could “not have an adverse environmental impact.”

Environmentalists have repeatedly challenged this decision in court. They argue that, since the plant was shut down, presumably for good, the question shouldn’t be: Is the current Greenidge plant less harmful than the dirty coal plant that was there before? Instead, the question should be: Is the plant more harmful than no plant at all? After all, the most likely counterfactual is not that Greenidge would have continued burning coal—it’s that it would have stopped burning fossil fuels altogether.

Furthermore, Greenidge’s opponents believe the plant should have been required to upgrade the facilities to the environmental standards required of new construction, which are higher than those for old plants. For example, since 2011 the DEC has recommended new and repowered plants use so-called closed-cycle cooling, in which cooling water is recirculated through the plant instead of discarded, significantly reducing wildlife mortality from impingement and entrainment, as well as the volume of hot water discharges. Greenidge, on the other hand, was allowed to continue using its antiquated once-through cooling system, in part because it was deemed too costly to upgrade given the facility’s historic annual revenue. 

Of course, that was before the plant started mining hundreds of thousands of dollars worth of Bitcoin every day.

Some locals told me they wouldn’t have a problem—or as big a problem—with the plant’s environmental impact if it were supplying much-needed energy to the grid. But it isn’t. The region didn’t suffer for lack of power while Greenidge was closed, and there still isn’t enough demand to make the plant profitable without Bitcoin.

“The only good thing about mining Bitcoin is somebody makes money,” John Halfman told me on a video call. “You’re not feeding electricity to homes; you’re not feeding electricity to industry. You’re not doing anything else good with electrons other than min[ing] money. So somebody is greedy. They’re using power plants out in the middle of nowhere, where no one’s going to fight it, to line their pockets.”

Halfman also said that Greenidge’s operations pose a serious threat to the state’s goal of slashing greenhouse gas emissions by 85 percent by 2050. Opposition to the plant is coalescing around exactly that fact, and it’s picked up momentum since the company declared its intention to expand. In early April, Earthjustice and the Sierra Club wrote to the DEC to sound the alarm regarding Greenidge’s emissions. There are subtle signs that the DEC is feeling the heat; after the agency received the environmental organizations’ letter, it described its oversight of Greenidge as “aggressive” and said it would carefully review the “precedential” nature of the facility.

Meanwhile, Greenidge’s expansion is barreling ahead. At the end of April, the Town of Torrey gave the company a green light to build four new buildings to house additional Bitcoin-mining hardware. Once those go up, local activists fear it will be that much harder to reverse the plant’s activities.

Before leaving town, I spent some time on the Keuka Outlet Trail. It follows the stream that connects Keuka Lake to Seneca Lake, running over an old railway, and ends near the Greenidge property line, which is posted liberally with no-trespassing signs.

The stream used to power an industrial thoroughfare. In 1820 there were seven gristmills, 14 sawmills, an oil mill, four carding machines for processing wool and other fibers, as well as multiple distilleries. A nonprofit has since transformed the area into a nature retreat with a wide gravel path for walking, running, and biking, well-situated benches for moments of quiet repose, and water access for fishing or boating. The waterfalls once harnessed for their power generation now flow uninterrupted, and the ruins of the area’s industrial past are being reclaimed by new growth.

This could have been the fate of an old coal-fired power plant on Seneca Lake, which in its later years produced energy people rarely needed and was too costly to run at a profit. Nearby residents might have breathed easier, and there would have been one less threat to Seneca Lake and the animals and people who depend on it.

Then a private equity firm found a way to give the plant a second life.

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