With Bitcoin hitting a record high value of $63,100 (at the time of writing), the ongoing climate crisis created by the mining of cryptocurrency, which is inherently baked into using said online currency as verifying purchases on a blockchain requires mining for more coins to verify it, is only accelerating. As the BBC reported earlier this year, the University of Cambridge Centre for Alternative Finance estimated that Bitcoin consumes more electricity annually than the entire country of Argentina, most of it generated from fossil fuels, and demand is only growing. (It’s also the reason you can’t buy a graphics card right now.)
In February, a video of a Bitcoin mining rig packed into a shipping container at a Texan oil well, powered by excess natural gas, went viral as thousands of people called out the Bitcoin mining company Giga Energy over what they saw as wanton environmental destruction. Now things are going one step further, as a power plant in Western New York sprung back into action last year solely to provide power for Bitcoin mining.
Bitcoin: Initiated pic.twitter.com/baB58FKw6T
— Matt Lohstroh (@lohstroh) February 8, 2021
The Greenidge power plant in Dresden, a village in the state’s Finger Lakes Region, formerly sat offline for seven years according to New York Focus. An erstwhile coal-fired plant that closed when its owner went bankrupt after New York State began to shift away from fossil fuel investments, Greenidge was purchased by equity firm Atlas Holdings in 2014 and converted to run on natural gas in 2017. It now brands itself as “the world’s first fully compliant powerplant-cryptocurrency mining hybrid.” Because Greenidge can source natural gas directly from the Empire Pipeline System and convert it into electricity via a generator with a max capacity of 106 megawatts, the costs to mine Bitcoin are theoretically as low as possible—putting the current return on investment for each coin mined north of $60,000.
In March of this year, Greenidge merged with IT company Support.com to become the first publicly-traded Bitcoin miner to generate its own electricity, though the plant began mining about 5.5 coins daily independently starting in March of 2020. This came after Atlas Holdings explored the possibility of hosting servers and Bitcoin miners on-site in 2019 and recognized the move as financially feasible. Once the merger between Greenidge Generation Holdings Inc. and Support.com is completed in the third quarter of this year, Greenidge Generation will be listed on the Nasdaq.
Of course, as New York Focus pointed out, local climate activists aren’t exactly happy about the existence of a natural gas-burning plant that exists solely to dig for digital currency, even if it currently also provides usable electricity. Aside from the air quality concerns, a coalition of environmental groups including EarthJustice and the Atlantic Chapter of the Sierra Club are worried that Greenidge could set a precedent for roughly 30 New York power plants in similar positions. To that end, the two groups sent a letter to Governor Andrew Cuomo on April 6 detailing their concerns—Cuomo’s action could set the tone for how closely the embattled administration follows its own 2019 Climate Act, which is looking to switch all of New York State over to emission-free electricity generation by 2040, and a 40 percent in greenhouse gas emissions statewide by 2030.
The concerns aren’t unfounded. Greenidge is currently only using 19 megawatts of capacity and plans to ramp-up to full capacity by the end of 2022, which would put out about 1 million tons of carbon dioxide per year, 65 percent over the plant’s current permit allowance. According to Coindesk, the plant plans to reach 500 megawatts of mining capacity by 2025, a nearly 25-fold increase over their current consumption. However, the getting’s been good for Greenidge so far and they have no incentive to stop: the plant has reportedly mined 1,186 Bitcoins in the year that it has been operating, at a cost of $2,869 each. Assuming Greenidge sold them all at current boom levels, that’s a profit margin of a little under $70 million. Returns like that would be enticing to any formerly bankrupted power plant looking to reopen.
Even China, which accounts for 65-to-80 of the world’s mining power due to its low electricity costs, is beginning to crack down on cryptocurrency mining to hit its air pollution targets. China has become a mining mecca due to its overproduction of wind and solar power, which can be snapped up for cheap by miners, but also due to its reliance on coal in some provinces, which also provides cheaper electricity but with an obvious added environmental cost.
Meanwhile, as Greenidge is looking to add four new servers to help increase Bitcoin production, the state Department of Environmental Conservation has reportedly deferred planning decisions to the local town of Torrey.