Opponents of Greenidge Generation’s Bitcoin mining operation in Dresden urged Gov. Kathy Hochul’s administration today to deny the facility’s application to renew its air emissions permit and to impose a statewide moratorium on proof-of-work cryptocurrency mining.
More than a dozen speakers at concurrent press conferences in Geneva and Albany argued that the rapid growth of Bitcoin mining in New York undermines the chances the state will meet the targets set in its 2019 climate law.
Meanwhile, on the deadline day for comments to the state Department of Environmental Conservation on the Greenidge air permit, hundreds of Finger Lakes businesses signed a letter to the DEC that said sharply increasing air pollution from Greenidge threatens the region’s wine and tourism industries.
“The Greenidge facility has nothing to offer the Finger Lakes but could have devastating effects on our environment and community,” said Kees Stapel, manager at Boundary Breaks Vineyard in Lodi.
Assemblymember Anna Kelles (D-Ithaca) said she intended to reintroduce a bill to impose a three-year moratorium on proof-of-work cryptocurrency and require a two-year environmental study of it negative effects. A previous version of the bill passed the state Senate but stalled in the Assembly.
Proof-of-work — Kelles’ target — is the name given to an energy-intensive method of verifying cryptocurrency transactions that Bitcoin, the world’s leading digital currency, relies on.
Most new cryptocurrencies are trying to perfect other verification systems that require far less energy. That’s a promising trend, Kelles said, because energy-efficient cryptocurrency could help democratize world payment systems.
“But allowing proof-of-work cryptocurrency mining to proliferate and add many hundreds of megawatts of energy consumption is socially, economically and environmentally irresponsible,” she told the Geneva press conference crowd.
Greenidge operates at least 15,000 Bitcoin mining computers that draw 44 megawatts of power from a recently converted coal plant that now burns natural gas. Company officials have told investors they plan to nearly double the energy their Bitcoin mining consumes next year.
Because its source of power is natural gas, the Greenidge plant belches hundreds of tons of greenhouse gases. Its air permit, which expired in September, allows it to emit up to 641,000 tons of CO2-equivalent annually.
When it applied earlier this year to renew that air permit, the company requested the same limit despite its sharply escalating power usage.
The DEC asked the company to explain how it intended to comply with the state’s 2019 Community Leadership and Climate Protection Act, which requires the state to reduce its CO2-e emissions by 40 percent by 2030.
Greenidge responded in a letter written by David Murtha of the consulting firm ERM. In that Aug. 2, 2021 letter, Murtha acknowledged that Greenidge’s combined CO2-e emissions from the plant itself and leaks from the natural gas wells and pipelines that supply it totaled more than 1 million tons per year — far above its requested limit.
Weeks later, DEC Commissioner Tweeted that Greenidge had not shown compliance with the CLCPA. Instead of ruling on the permit renewal application, the DEC extended the deadline for public comments until today. The DEC’s final decision on the permit application is pending.
Opponents claim to have submitted more than 5,000 comments calling for the Hochul Administration to deny the permit renewal.
While Greenidge has drawn the most public attention, numerous other companies are trying to break into the lucrative game of proof-of-work Bitcoin mining in New York.
The soaring price of Bitcoin — $57,935 at 3 p.m. today — helped boost Greenidge’s crypto revenue from $3.0 million in the third quarter last year to $31.2 million in the same period this year.
But to compete in the Bitcoin game, new players must obtain a major source of very cheap power and spend tens of millions of dollars to buy the latest computers devoted solely to analyzing Bitcoin transactions (application specific integrated circuits, or ASICs).
Greenidge uses cheap “behind-the-meter” energy that never reaches the electric grid. Digihost, a Canadian Bitcoin mining company, hopes to adopt that same model by acquiring a gas-fired plant in North Tonawanda.
However, other groups that see the obstacles presented by GHG-emitting fossil fuel plants and rely on state allocations of renewable hydropower (or blends of energy sources dominated by hydro).
To help finance its Bitcoin computer buying binge, Greenidge converted to a public company this year by completing a reverse merger. As a publicly traded company, it can employ shareholder money to finance gigantic ASICs orders.
Following Greenidge’s example, two low-profile companies plan to go public soon through their own reverse mergers in order to finance the installation of tens of thousands of crypto mining machines in New York.
TeraWulf Inc., which plans to merge next month with Ikonics Corp., has told potential shareholders that it intends to launch a 500-megawatt Bitcoin mining operation at Somerset, a shuttered coal-fired power plant in Barker on Lake Ontario, as well as a 300-megawatt Bitcoin mine next to a nuclear plant about 45 miles southwest of Scranton, Pa.
TeraWulf says the New York Power Authority allocated 90 megawatts of low-cost (mostly hydro) power for the project in March 2020, “with the potential to expand into an addition 410 MW of energy supply.”
Another Securities and Exchange Commission document suggests that TeraWulf or affiliates may be pursuing 100 MW of hydro power for Bitcoin mining at a retired coal plant in Lansing on Cayuga Lake.
Shareholders of Ikonics are set to vote the proposed merger with TeraWulf on Dec. 11.
Meanwhile, Gryphon Digital Mining Inc. plans to merge in the first quarter of 2022 with Sphere 3D Corp.
In a recent slide show for potential investors, Gryphon claims that it has “secured 21 megawatts of power for its initial 7,200 machines” at an undisclosed location in upstate New York.
Gryphon said its “best-in-class estimated energy costs” will be as low as 1.3 cents per kilowatt hour, thanks to an allocation of New York hydroelectricity. Furthermore, it says its hosting agreement with Core Scientific provides another 230 MW of cheap hydro, and that it eventually intends to broaden its energy sources to nuclear and solar.
The company’s slide show says it has “options to acquire up to 220,000 state-of- the-art miners (ASICs).”
Greenidge has big plans too.
In October, it announced that it had doubled its mining machine order to 22,500. It also said it was negotiating potential deals in Texas that could provide up to 2,000 MW of low-cost energy for Bitcoin mining.
And the company said it had signed an agreement to acquire a 175-acre site in South Carolina for a Bitcoin mining operation there powered largely by nuclear.
Despite their major ambitions for Bitcoin operations in New York, TeraWulf and Gryphon did not participate in a recent state Assembly hearing on cryptocurrency. Dozens of speakers testified for more than five hours last month.
But in other venues TeraWulf and Gryphon officials have stressed their reliance on renewable energy rather than fossil fuels that emit greenhouse gases. Paul Prager, CEO of TeraWulf, has also argued that using hydropower for Bitcoin mining tends to stabilize the grid.
But a pair of Cornell University professors disagree.
“Our New York hydropower provides a great benefit for a stable grid, as it can be produced more or less on demand,” Robert Howarth said in a recent email from Glasgow, Scotland. “To use that hydro for Bitcoin instead would seem to increase the instability.”
Howarth, a biochemist, also cited the “opportunity cost” using hydro power for Bitcoin mining. “If cryptocurrency is sucking up renewable electricity, it is less available for replacing fossil-fuel electricity, and more expensive to other customers, which could slow the CLCPA-mandated transition (to renewables).” Cornell economics professor Eswar Prasad agreed. “We can use those renewable energy sources for more constructive social purposes,” he said in testimony at the Assembly hearing last month.
Prasad also said that cryptocurrency mining produces relatively few jobs. “The reality is that ASICs don’t go out and stay in hotels or eat at restaurants.
“In terms of …. mining that supports proof-of-work-based cryptocurrencies, I see many detrimental consequences for New York … and very few economic benefits from it.”