Syracuse, New York. By next year, the owners of the Seneca Lake gas-fired power plant hope to generate enough electricity to power 85,000 homes.
But most of this electricity does not turn on the lights in the living rooms. Instead, it will remain at the Dresden plant, powering up to 27,000 computers that will operate 24 hours a day to receive an increasingly rare virtual currency called bitcoin.
The plant worries climate change activists who say the sheer amount of energy consumed in so-called bitcoin mining will make it difficult for New York City to achieve its aggressive climate change goals.
“We’re talking about burning more fossil fuels to make fake money in the midst of climate change, which we think is insane,” said Yvonne Taylor, vice president of environmental group Seneca Lake Guardian.
The Greenidge Generation Holdings plant is part of a growing trend. The centers of profitable cryptocurrency consume huge amounts of energy, so much that they take over power plants or old factories to use for themselves. Some have already opened stores in upstate New York, where energy is cheap and cold weather lowers the cost of cooling thousands of computer processors, each of which emits as much heat as a 1,400-watt hair dryer.
New York City will have to grapple with the growing demand for bitcoin mining if the state expects to cut greenhouse gas emissions, said Tristan Brown, professor of sustainable resource management at SUNY College of Environmental Sciences and Forestry.
“Bitcoin does raise some interesting questions,” Brown said. “Do we really want this to contribute to our (electrical) demand? What value does this bring to the state from an economic point of view? This is ultimately what government policy will have to determine. ”
While these issues are being discussed, legislators from both chambers are introducing bills that introduce a three-year moratorium on cryptocurrency mining.
“The ongoing and expanding operation of cryptocurrency mining centers will significantly increase the amount of energy consumed,” says a Senate bill sponsored by MP Kevin Parker of Brooklyn. “It is reasonable to believe that the associated greenhouse gas emissions will irreparably harm compliance with the Climate Leadership and Community Protection Act.”
Member of Parliament Anna Kelles, Ithaca, plans to present the bill to the Assembly this week.
According to its owner, Coinmint, the world’s largest cryptocurrency mining operation takes place at Alcoa’s former aluminum smelter in Massena. In April, a British Columbia company applied to buy a 55-megawatt gas-fired power plant north of Buffalo and turn it into a bitcoin mining operation.
“This is just the beginning,” environmental organizations Earthjustice and the Sierra Club wrote in early April to New York City regulators.
“The Greenidge Power Plant is one of nearly 30 power plants in upstate New York that could be permanently operational for Bitcoin mining and other high-energy data-related tasks,” the letter said.
The groups are urging the state to enforce strict environmental standards as the Greenidge plant tries to renew its air permit, which expires in September. The letter says that if the plant reaches its 106 megawatts capacity, Greenidge will inject more than 1 million tons of climate-warming carbon dioxide into the atmosphere, which will exceed acceptable limits.
The groups said that without careful scrutiny and strict regulation of power plants that have turned into Bitcoin mining hubs, New York will “face major challenges” to reduce its carbon emissions by 40 percent by 2030 and 85 percent by 2050, as mandated by the Act. on climate leadership and community protection.
“The state has made a commitment to its people, country and planet that we have very aggressive goals,” Kelles said. “The question with (Greenidge) is whether the way they are going to make money will completely contradict the goal of the state.”
Greenidge spokesman Michael McKeon said the company is and will continue to comply with all requirements issued by the State Department of Environmental Protection.
Greenidge has rebuilt the mothballed power plant and helped the local economy, CEO Dale Irwin said in a statement.
“We have dozens of employees compared to two just a few years ago, and we plan to create a dozen or more new high-tech jobs in just the next few months,” he said. “We are a business that fully supports our community partners, protects our environment and Seneca Lake, and operates in full compliance with all laws, environmental permits and regulations.”
McKeon said 60 percent of the plant’s electricity is distributed to the grid, where it is used to heat and light homes and businesses. The company “regularly supplies electricity to the grid and, if required, will provide 100 percent of our capacity to the grid,” he said.
In documents announcing its intention to become a public company through a merger with a tech support company, Greenidge said it “currently produces 19 MW of capacity” at the Dresden plant and will grow to 85 MW by the end of 2022. will be sold online at a profit. During a cold snap in February, CEO Jeff Kirt told potential investors that Greenidge made so much money selling electricity that the cost of mining bitcoin was minus $ 371.
Greenidge said it plans to expand its business model and will operate a 500-megawatt mining capacity by 2025, although no additional projects are planned in New York, McKeon said.
A megawatt is enough to power about 1,000 homes in New York City.
Bitcoin mining centers like Dresden consume huge amounts of electricity. Globally, bitcoin mining uses as much electricity as the rest of Argentina, with a population of 45 million, according to Lee McKnight, professor of information research at Syracuse University. In 2018, a Princeton University professor told Congress that bitcoin mining accounts for about 1% of the world’s electricity consumption, or about the same as the entire state of New York.
To earn bitcoins (more on that later), you need as much of the processing power of your computer as possible, which means that you need a lot of electricity to run these processors. The cheaper the power, the more computers you can run and the higher your chances of getting Bitcoin, which is currently valued at around $ 58,000.
The co-founder of Coinmint, which operates a mining center in Massena on the site of the former Alcoa Aluminum, said in a 2019 video that the company was paying about $ 27 per megawatt hour for electricity. According to him, the cost in the retail market will be $ 200 per megawatt.
Greenwich plans to go even further. The company “plans to become the first publicly traded bitcoin mining company with a 100% power plant” to go public this year, according to filings with the Federal Securities and Exchange Commission.
The electricity generated and used locally is called “off-the-meter” because it is not distributed across the grid.
Greenidge advertises upstate New York, “a dust-free climate (which) ensures there is no need for expensive air conditioning,” and Greenidge’s access to “one of the cheapest natural gas in North America.”
McKeon declined to say how much Greenidge paid for the gas.
Environmentalists note that some of this gas likely comes from hydraulic fracturing, another controversial and energy-intensive process in which natural gas is extracted from rock a mile or more below the earth’s surface. They note that in 2015, Greenidge received $ 2 million for the pipeline project through Governor Andrew Cuomo’s competitive regional awards. The state said the project “will not have a significant impact on the environment” and “will provide the necessary source of energy.”
“They received a $ 2 million economic development grant to build a pipeline to a milling gas flaring plant,” said Joseph Campbell, president of Seneca Lake Guardian.
Greenidge announced in its merger announcement that 1,186 bitcoins were seized in the year ended February 28. Bitcoin’s value may fluctuate, but on Monday it was worth around $ 58,000. This means that Greenidge’s 12-month Bitcoin revenue is worth around $ 69 million. The company said it spent just $ 3.4 million mining these bitcoins.
Bitcoin or any other cryptocurrency is virtual money that is stored as an investment or used to pay for online transactions. It’s like PayPal without a bank. It’s also like Wikipedia: anyone can participate and see what everyone else has done, because all transactions are public and online.
To catch bitcoin, your computer must be the one that solves a complex algorithm that helps validate a long string of transactions. Every bitcoin mining computer in the world, from Brazil to China to Dresden, competes for one bitcoin at the same time, which is why the process consumes so much power. New bitcoin is credited every 10 minutes.
“In true Darwinian style, the most powerful miners (specialized computers), using the most energy, win more bitcoins,” says the Seeking Alpha website, which provides investment advice.
There is a limited supply of bitcoins – 21 million, and almost 19 million of them are already in demand. It is getting harder and harder to get each bitcoin because the algorithms are getting more complex. This requires even more processing power.
The Lake Seneca power plant was built in 1937 and was fueled by coal until it closed in 2009. The company, which owns Greenidge, has invested $ 65 million to reopen the power plant, converting it to natural gas. The factory reopened in 2017 and started mining bitcoin in 2018.
Greenidge recently received approval from the City of Torrey to add four buildings to the site, which will house another 10,000 mining vehicles.
Residents and environmental groups, including the Sierra Club, have filed a lawsuit in state courts, claiming that the proposed expansion of the Yates County plant would require huge amounts of cooling water to be drawn from the lake, which would then be piped back. lake at higher temperatures.
“Given the amount of energy that will be used, there are serious problems with air pollution and the discharge of heated water that ends up in the lake,” said Richard Lippes, a Buffalo lawyer representing homeowners.