New York denies air permit to Bitcoin mining power plant

Bitcoin miners in New York State faced a regulatory blow today when the state denied air permits for a gas-fired power plant used to extract Bitcoin. This is the latest step New York has taken to crack down on crypto mining while trying to achieve its climate change goals.

The decision was made for Greenidge Generating Station in New York’s Finger Lakes region. Bitcoin mining brought new life and renewed controversy to the disputed facility in 2020. It provoked outrage from some locals who were concerned about how the facility could affect fish and tourism by discharging hot water into nearby Seneca Lake. At the state level, Greenidge’s revival has sparked fears that pollution from the energy-intensive process of extracting Bitcoin could revive other zombie power plants and derail New York’s climate goals.

The state of New York set a goal in 2019 to cut its greenhouse gas emissions by at least 85 percent over the next few decades. The battle for Greenidge has been billed as a test of how serious the state is in achieving that goal. Is it willing to take a hard line against the lucrative Bitcoin industry that has flourished in New York ever since China fired miners last year? The New York Department of Environmental Conservation ultimately ruled that Greenidge’s operations “would be in violation of state greenhouse gas emission limits set by 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 was temporarily shut down before retrofitting itself to run on gas in 2017. Then, in 2020, the plant’s operators discovered a more lucrative venture and began extracting Bitcoin, which now make up the vast majority of the company’s revenue.

Bitcoin is the most polluting cryptocurrency, not only because it is the most popular, but because it relies on a particularly energy-intensive security mechanism to keep the general ledger accurate. To verify transactions and earn new tokens in return, Bitcoin miners use specialized computers to solve increasingly complex puzzles. All that computing power requires a lot of electricity, which generates greenhouse gas emissions and other pollution if it comes from a power plant that runs on fossil fuels.

Greenidge’s air quality permits expired last year, sparking a major battle over whether these permits should be renewed since they were issued before the plant began extracting Bitcoin. Before crypto mining came into the picture, Greenidge was expected to serve primarily as a “peak facility” that would start up when the grid needed extra power to meet high demand. Greenidge can still send power to the grid when it’s stressful, but it’s also running around the clock to extract Bitcoin – and that’s why environmentalists have become more concerned about the pollution.

The plant’s operators say the plant is carbon neutral because it pays for carbon compensation to try to balance the impact its pollution has on the climate. But carbon offsets (which usually involve investing in renewable energy, tree planting or forest conservation) have a history of not leading to actual reductions in CO2 that warms the planet.

This is the second decision the state has made this month that prioritizes climate goals over cryptocurrency operations. Earlier this month, the state legislature passed a bill imposing a two-year moratorium on new permits for fossil fuel power plants used to extract Bitcoin and similar energy-hungry cryptocurrencies while the state conducts a study on their environmental impact. The next litmus test for New York’s commitment to climate action will be whether Governor Kathy Hochul vetoes or signs the bill. However, that moratorium would not apply to Greenidge, who was essentially a grandfather as long as its existing permits were renewed.

“This is step one in addressing energy consumption and climate issues with crypto mining, and we are still looking to the governor to sign legislation that will address this issue more broadly. But for today we are celebrating,” said Elizabeth Moran, a political spokeswoman for the nonprofit Earthjustice. .

The decision today will not immediately close the plant. Greenidge is expected to appeal the decision and continue to operate as it does. “We can continue to run uninterrupted under our existing Title V air permit, which remains in effect as long as it succeeds in challenging this arbitrary and capricious decision,” the company said in a statement today.