Why New York State is experiencing a Bitcoin boom
A bitcoin mining operation opens this month northeast of Niagara Falls on the site of the last operating coal-fired power plant in New York State.
Statewide, a former aluminum factory in Massena, already one of the largest cryptocurrency sites in the United States, is expanding.
And in Owego, a metal recycling tycoon with 11.3 million Instagram followers is making a serious start-up with banks of computers in shipping containers next to a junkyard.
Soaring Bitcoin values may be Wall Street’s investment rhetoric, but a few hours north in upstate New York, the buzz is about companies scrambling to create digital currency by ” mining “virtually with all types and sizes of computer farms. constantly spinning through transactions.
In just a few short years, part of northern and western New York City has grown into one of the nation’s largest Bitcoin producers. The prospectors of this digital gold rush need a lot of cheap electricity to run thousands of energy-hungry computing platforms.
The region – with its cheap hydroelectric power and abundance of closed power stations and old factories – was ripe for Bitcoin mining. Abandoned infrastructure, often with existing connections to the power grid, can easily be converted for Bitcoin mining.
The companies say they are boosting local economies by bringing the industry back and creating a crypto vanguard in upstate New York, where the Bitcoin stock, though unpredictable, has hit record highs on Wall Street this year. and that incoming mayor Eric Adams envisions as a cryptocurrency hub.
But the surge in activity has also sparked a growing uproar over the amount of electricity and pollution involved in mining Bitcoin. Globally, cryptocurrency mining is said to consume more electricity each year than all of Argentina. China, which was once home to perhaps two-thirds of all crypto-mining, banned the practice this year to help it meet its carbon reduction targets, leading some miners to New York.
As a result, according to environmental groups, the Wild West-style rush, coupled with a lack of restrictions on Bitcoin mining, threatens the state’s own emission reduction targets, which call for more. renewable energy and rapid reductions in fossil fuel emissions.
Bitcoin mining companies often only need basic building or planning permits from local governments, many of which are faded industrial towns hungry for new commercial tax revenues they can generate.
In the Finger Lakes region, a former coal-fired power plant on pristine Seneca Lake has been converted to a Greenidge Generation natural gas combustion plant, which now powers the on-site Bitcoin mining operation. Near Buffalo, a Bitcoin company is looking for cheaper electricity by taking over a part-time gas-fired power plant and turning it on for 24-hour use.
The resulting rise in greenhouse gas emissions will accelerate the impact of climate change, according to environmental groups like Earthjustice and the Sierra Club, which monitor the many old natural gas plants in upstate New York. that could be easily reused in Bitcoin mining operations.
Factories that buy renewable energy from the grid have also sparked complaints. Since a large Bitcoin mining plant can use more electricity than most cities in the state, environmentalists warn that mining cryptocurrency will leave other areas dependent on fossil fuels. .
The abundance of hydroelectric power and other types of renewable energy in the upstate helps large mining companies that buy it in bulk market themselves as environmentally conscious.
The plant that opened northeast of Niagara Falls this month in Somerset, New York, is part of a $ 550 million project by Terawulf, a Bitcoin mining company. The project also includes a proposed 150 megawatt data center at a former coal-fired power plant on Cayuga Lake in the Finger Lakes.
Paul Prager, managing director of Terawulf, said the Somerset plant would use hydropower recovered from the falls which is otherwise difficult to send to other locations due to grid congestion.
And because the plant would follow the state’s environmental rules and not cause air pollution, he said, “we consider regulation to be a very good thing.”
But despite the requirement for companies that engage in many aspects of Bitcoin business, including currency trading, to obtain a license, New York does not impose any restrictions on mining.
Some municipalities, including Plattsburgh and Massena, two of Bitcoin’s top mining destinations near the Canadian border, have resorted to moratoriums on the practice.
The bans have since been lifted, but some lawmakers want New York to be one of the first states to ban certain types of Bitcoin mining. In June, the state Senate approved a bill that would have imposed a statewide moratorium on certain fossil-fueled mining operations; legislation died in the Assembly.
“It has been easy for these companies to go unnoticed because the whole industry is confusing to understand at first,” said MP Anna R. Kelles, a Democrat who represents the Ithaca region and has sponsored The law project. “It’s too new an industry not to be federally or state regulated with respect to greenhouse gas emissions and their effects on water and air. (Ms Kelles said she plans to revive the bill next year.)
For the same reason, some environmental activists have urged Governor Kathy Hochul to issue an executive order banning certain crypto mining activities.
In 2017, the closed coal-fired power plant on Seneca Lake was converted to a natural gas power plant by Greenidge, which at the time was owned by Atlas Holdings, a private equity firm with $ 6 billion in stakes. Greenidge is now billing itself as the first publicly traded company with a bitcoin mine integrated as part of a power plant. The plant has a capacity of 106 megawatts, which allows it to generate enough electricity to power approximately 85,000 homes.
Greenidge chief executive Dale Irwin said in a statement that the plant “is creating a new economic engine bringing part of the world’s digital future to upstate New York.”
But the plant’s greenhouse gas emissions have increased alongside its mining activity, as has opposition from some local residents who call the plant an environmental threat to this rural expanse of vineyards, farms, World-class pristine waterways and gorges.
A local blogger reported Greenidge’s permit to draw more than 100 million gallons of water per day from Seneca Lake for cooling and then release it at warmer levels to a tributary of a trout stream in proximity.
Mr Irwin said the flow was safe and the lake temperatures, measured daily by independent sources, had not been affected.
And although the plant’s emissions have increased since 2019, he said, they were still well below state allowed levels. The factory poses no threat to the environment, he insisted.
Greenidge calls on the state to renew air emissions permits, and opponents see an opportunity for the state to curb the company’s expansion.
Elected officials, including U.S. Senators Kirsten Gillibrand and Chuck Schumer, have called on state and federal regulators to take a close look at the plant’s request.
Faced with mounting political and public pressure, Basil Seggos, the State Commissioner for Environmental Conservation, wrote on Twitter in September that “Greenidge has failed to demonstrate compliance with New York’s climate law.” He urged residents to participate in the public comment period regarding the license renewal.
To build several structures at the plant, Greenidge obtained approval in April from the local Town of Torrey Planning Council.
Patrick H. Flynn, 79, a farmer and Torrey Town Supervisor, called Greenidge a blessing to the area and said renewables were “overdone.”
“We cannot restrict a business,” he said. “Whether they’re making Bitcoin is no different from raising cattle, pigs, or chickens. “
Yvonne Taylor, vice president of Seneca Lake Guardian, a local conservation group, accused state officials of failing the public by not requiring an environmental review before issuing permits in Greenidge, and essentially leaving approvals to local governments.
“It can’t be a city-to-city battle,” said Ms. Taylor, a speech-language pathologist whose family has lived on Seneca Lake for generations. “We need the governor to step in. If she is to be a climate champion, she needs to adopt a moratorium on this type of energy-intensive cryptocurrency or we will never meet our climate goals.”
Greenidge’s case is not unique. Digihost, the Bitcoin company in Buffalo that is reviving a gas-fired power plant, has been criticized that increased gas emissions will affect areas long plagued by industrial toxins. Among them is Love Canal, the area of Niagara Falls that has become infamous for the toxic dump that has harmed hundreds of residents.
But local officials approved Digihost’s plans in large part because the environmental toll of the new operation seemed minimal compared to the benefits the company was supposed to bring, including new jobs and up to $ 1 million in fees. annual for municipal water to cool the plant, said Robert Pecoraro. , the chairman of the municipal council of North Tonawanda, where the factory is located.
Digihost officials say the plant will operate within state emission limits, begin to switch to more renewable energy sources over time, power the grid when needed and help western l New York State to keep pace with the tech industry while creating at least 30 permanent jobs.
Mr. Pecoraro recently stood in front of the gas plant and watched the workers build a large hangar to house the new servers. He said he did not understand the opposition to Digihost and the economic boost it would bring to the region.
“A lot of industries have left over the years,” he said. “And here we are trying to bring in Digihost and people are fighting us over it.”