Bitcoin miners in New York State faced a regulatory blow today as the state denied air permits for a gas-fired power plant used to mine Bitcoin. This is the latest step New York has taken to crack down on crypto mining as it tries to meet its climate change goals.
The decision was made for the Greenidge plant in the Finger Lakes region of New York. Bitcoin mining has breathed new life and renewed controversy into the beleaguered factory in 2020. This sparked outrage from some local residents worried about how the factory could affect fish and tourism by rejecting hot water in nearby Seneca Lake. At the state level, the revival of Greenidge has raised concerns that pollution from the energy-intensive Bitcoin mining process could revive other zombie power plants and derail New York’s climate goals.
New York State set a goal in 2019 to reduce its greenhouse gas emissions by at least 85% over the next few decades. The fight against Greenidge was presented as a test of the state’s seriousness in achieving this goal. Is he ready to crack down on the lucrative bitcoin industry that has boomed in New York since China kicked out miners last year? The New York Department of Environmental Conservation ultimately determined that Greenidge’s operations “would be inconsistent with statewide greenhouse gas emission limits established in the Climate Act. “.
Greenidge operated as a coal-fired power plant for decades. But as coal struggled to compete with cheap natural gas across the country, the plant temporarily closed before upgrading to run on gas in 2017. Then, in 2020, plant operators spotted a more lucrative business and started mining Bitcoin, which now makes up the vast majority of the company’s revenue.
Bitcoin is the most polluting cryptocurrency, not only because it is the most popular, but also because it relies on a particularly power-hungry security mechanism to maintain the accuracy of its ledger. To verify transactions and earn new tokens in return, Bitcoin miners use specialized computers to solve increasingly complex puzzles. All this computing power requires a lot of electricity, which generates greenhouse gas emissions and other pollution if it comes from a power plant running on fossil fuels.
Greenidge’s air quality permits expired last year, sparking a major battle over whether those permits needed to be renewed since they were issued before the factory began mining Bitcoin. Before crypto mining came into the picture, Greenidge was meant to serve primarily as a “surge factory” that would kick in whenever the grid needed additional electricity to meet high demand. Greenidge can still send power to the network when stressed, but it also works around the clock to mine Bitcoin – which is why conservationists are increasingly worried about its pollution.
Plant operators say the plant is carbon neutral because it pays carbon offsets to try to balance the impact of its pollution on the climate. But carbon offsets (which typically involve investing in renewable energy, planting trees or conserving forests) have a history of not leading to real reductions in global-warming CO2.
This is the second move by the state this month that prioritizes climate goals over cryptocurrency operations. Earlier this month, the state legislature passed a bill that sets a two-year moratorium on new permits for fossil-fuel power plants used to mine Bitcoin and similar power-hungry cryptocurrencies. while the State is carrying out a study on their environmental impact. The next litmus test for New York’s commitment to climate action will be whether Governor Kathy Hochul will veto or sign this bill. This moratorium, however, would not apply to Greenidge, which was essentially grandfathered as long as its existing permits were successfully renewed.
“This is the first step in addressing the energy consumption and climate issues related to crypto mining, and we still expect the Governor to sign legislation that will address this issue more broadly. But for today, we celebrate,” says Elizabeth Moran, policy advocate at environmental law nonprofit Earthjustice.
Today’s decision will not immediately close the plant. Greenidge should appeal the decision and continue to operate as it does. “We can continue to operate uninterrupted under our existing Title V Air Permit, which is still in effect, for as long as it takes to successfully challenge this capricious and arbitrary decision,” the company said in a statement. today.