The world is watching as bitcoin battle brews in the US

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Overview

This article will focus on the creation of wealth through cryptocurrency, and the ways in which some forms of cryptocurrency mining can accelerate climate chaos in ways we couldn’t imagine just as few years ago.

In our fight to slow the advent of a climate catastrophe through the build-up of greenhouse gases, many scientists, policy-makers and environmental advocates have focused largely on the extraction of fossil fuels. Hydrofracking and mountain-top removal are most certainly implicated in the alarmingly steep increase in carbon in our atmosphere. But fossil fuel extraction is only one of the culprits in the build-up of carbon in the atmosphere. Other significant anthropogenic forces include agricultural and forestry practices, as well as the melting of the permafrost in northern climates. But aside from the ecological and energy extraction components, there is a behavioral component, as well. In an effort to avoid run-away global warming, it’s essential that we look at our patterns of consumption, and, importantly, the environmental costs associated with making money.

It’s not just investors who are interested

Bitcoin is big.

*FracTracker’s calculations indicate that the percentage may be closer to 40%. Here’s our math: According to nasdaq.com, about 46 million Americans now own a share of Bitcoin. The US Census estimates there are  about 209 million Americans over the age of 18, and according to Forbes, approximately 55% of those adults own some stock. 55% of 209 million is about 114 million people. 46 is 40% of 114. 

Figure 1: Fluctuation of Bitcoin value, July 2020-2021. Source: Coindesk, 7/29/2021

Many believe, with enthusiasm approaching religious fervor, that this form of cryptocurrency is the answer to an otherwise centralized banking system that has benefited the privileged few. Anyone with access to the internet can send money across the world in a matter of minutes – 24 hours a day, 7 days a week, 365 days a year, which makes this system very appealing. And many supporters of Bitcoin tend to look to the short-term gains, rather than long term impacts, of this method of generating wealth, claiming that the “societal value Bitcoin provides is worth the resources needed to sustain it.”

Governmental regulators are most concerned on regulation of cryptocurrency because its volatility that could imperil investors seeking to accumulate wealth. As you can see in Figure 2, below, the value of one type of cryptocurrency does not necessarily follow that of another.

Figure 2: Cryptocurrency values can either increase or decrease over short intervals of time. Source: CNBC, 7/26/2021

Environmentalists, however, are focusing on a broader risk connected with crypto mining—one that could impact the survival of our planet, not just the wealthiest of investors. This risk stems from the astronomical quantity of energy required to run some types of cryptocurrency operations.

Where do you mine for Bitcoin?

Unlike extraction mining for natural resources like coal, diamonds, or large trees, cryptocurrency mining requires four things: computing power capable of running complex calculations, a ready source of cheap energy to run the mining computers, proximity to high-capacity power lines, and a way to cool the equipment.

In general, locations that have cooler climates, and require fewer months of air conditioning, are more economically attractive. So while computers can be installed in a new warehouse facility, many mining operators are shopping around for structures like retired electrical generation facilities, which include old power plants. These power plants typically have many attractive features: high capacity powerlines connected to the grid, and also a built-in cooling system that often discharges waste heat to an adjacent lake or river. In many cases, and old power plant has the ability to generate its own source of electricity, making the operation more affordable. Whether the the operation is billed as a proposed data center, or sometimes specifically as a cryptocurrency mining facility, these factors are the same.

According to datacenters.com, there are nearly 2600 data centers worldwide (see Figure 3, below). This includes 930 in the eastern United States, 378 in the western US, 556 in Europe, and 498 in Asia. An increasing number of these facilities are used for cryptocurrency mining. Of course, many are used for other purposes, such as cloud-based computer file storage.

Figure 3: Data center locations around the world. Source: datacenters.com

Data centers

Regardless of whether a facility is a generalized data center, or a more specific cryptocurrency mining operation, communities may want to be aware of where retired electrical generating facilities are located because of the potential for repurposing them for these types of operations. FracTracker Alliance used the Energy Information Administration (EIA’s) list of retired electrical generation facilities and created this map showing facilities that could very well be desirable for these purposes.

View the map “Details” tab below in the top right corner to learn more and access the data, or click on the map to explore the dynamic version of this data. Data sources are also listed at the end of this article. In order to turn layers on and off in the map, use the Layers dropdown menu.

View Full Size Map | Updated 8/1/2021 | Map Tutorial

How does Bitcoin work?

One important term in understanding cryptocurrency is blockchain. This is a way of keeping track of transactions that is transparent to anyone who wishes to see them, and allows transactions to occur without the use of a middleman like a bank or credit card company.

Another term that is perhaps less known, but crucial in discussing the impacts of cryptocurrency on the environment is “proof-of-work,” a process used by both Bitcoin and Ethereum. This form of cryptocurrency validation uses a method to achieve consensus on the blockchain. Simply put, proof-of-work cryptocurrency is created as many machines all work to solve the same mathematical equation, or puzzle. The first machine to solve the problem wins. The more machines you have working on the same puzzle, the greater the chances you have of profiting. As the complexity of the computations increases, it makes it harder for the average person to profit, since one has to have thousands of machines in order to remain competitive (see Figure 4, below). In this sense, the system begins to resemble a traditional, old, and centralized capitalist system that remains profitable to the very wealthy. This facet of current cryptocurrency mining has drawn criticism from previous enthusiasts.

Figure 4: Cryptocurrency mining can require banks of many thousands of computers. Source: WikiMedia Commons

While there are other models for cryptocurrency mining, the proof-of-work model is of particular concern to environmentalists worldwide because of its energy-intensive nature. Proof-of-work mining can use the same amount of energy as entire countries like Argentina, Sweden, or Malaysia.

And its popularity is increasing rapidly. Cryptocurrency mining energy use has risen 320% in the past 5 years.

A 2018 study published in Nature found that the number of computers used to mine Bitcoin could singlehandedly produce enough greenhouse gases to raise global temperatures above the 2-degree Celsius tipping point in less than three decades. Everything we do or plan to do about climate change will be undermined by growing cryptocurrency mining operations unless we address this industry.

The facts and figures for the cryptocurrency mining industry are changing monthly. China has been historically the worldwide center of cryptocurrency mining. However, just a few months ago, in May 2021, Beijing expelled 50% of its crypto mining operations. This alone quickly dropped the global energy use for the industry by half, as facilities in China went off-line. According to one article, removing China from the cryptocurrency playing field may result in a dampening of the industry’s environmental impacts. The geographic centers of mines are now outside of China in the US and elsewhere, using more efficient computers, as well as renewable energy and fossil fuels other than coal. Nevertheless, until alternatives to proof-of-work mining are adopted, the energy use for this industry remains out-sized, and a grave concern to climate scientists.

A Finger Lakes microcosm of a world-wide trend

What began as a small protest against cryptocurrency mining along the western shore of Seneca Lake is now an international story as the whole world watches Bitcoin operators move to the US. See location in Figure 5, below.

Figure 5: Location of Greenidge Generation Facility, Dresden, NY. Source: FracTracker Alliance

The story in New York State began at the Greenidge facility along the shores of Seneca Lake in the heart of the Finger Lakes, and is now the test case for proof of work crypto in New York, and beyond. This once mothballed coal-fired plant sat dormant for 7 years before it was repurposed to burn natural gas to supply power to the grid in times of high demand. Quickly finding that unprofitable, the owners installed 7,900 Bitcoin machines. This change in usage increased the air emissions at the Greenidge plant ten-fold compared with its previous levels as a “peaker” power plant. In January 2020, for example, operating at 5% of its capacity (similar to when it was serving as a power plant) the plant emitted 28,301 tons of CO₂. This is equivalent to what would be produced by the electricity consumption in over 4,000 households. By December of 2020, CO2 emissions jumped to 243,103 tons. During that same period NOx emissions jumped from 5.2 to 49.2 tons. CO2 is a potent greenhouse gas that fuels climate warming and instability. Increased NOx levels have deleterious respiratory effects on humans, and have been associated with numerous other human health impacts.

Now, Greenidge’s plan is to expand 25-fold by 2025, using at least 500 megawatts of power along Seneca and elsewhere. Recently, Greenidge Generation LLC submitted its application for a renewal of its air permit and requested that their current air permit be unchanged, which allows annual emissions of up to 641,878 tons of carbon dioxide equivalent (“CO2eq”).  This power plant had zero emissions for approximately 5 straight years (2011-2016) and then was permitted in 2016 to pollute 641,878 tons of CO2eq per year.  The power plant will continue to increase its energy consumption and its emissions to its permitted limit, absent any modifications to the permit by the the New York State Department of Environmental Conservation (NYSDEC).

Concerns about the plant’s negative impact are varied: the facility could negatively impact the region’s clean air, water, aquatic life, the health of its 4.2 trillion-gallon fresh water lake (that serves as a drinking water source for 100,000 people), and the region’s vibrant economic engine of agriculture and tourism which supports 58,000 jobs and generates $3 billion annually for New York.

The plant is legally permitted to discharge up to 134 million gallons of 108 degree F water into Keuka Outlet a day. This stream drains directly into Seneca Lake, and is ranked by New York State Department of Environmental Conservation as a protected trout stream (data set here).  While the dilution factor of this quantity of the hot water into Seneca Lake is considerable, the flow volume of Keuka Outlet, and dilution value it provides, is considerably less.  Furthermore, thermal inputs of any sort can enhance the growth of environmentally destabilizing harmful algal blooms (HABs), which are plaguing many water bodies, including the Finger Lakes, in recent years.

Opponents of the facility include residents, property owners, grape farmers, winery owners, and vacationers who flock to the Finger Lakes each year to enjoy this world-class tourist destination. While this community is unique in many ways, it’s also similar to “Anytown, USA,” made up of farmers, teachers, small business owners and residents who are working hard to protect their families and livelihoods from polluting industry.

Greenidge is not an outlier, it is a new business model that Bitcoin investors are eager to replicate. Bitcoin operators search for areas with cheap power sources or power plants that are not operating at full capacity to install Bitcoin mining machines.

Some power plants still in operation are also considering changing their operations from electric production to Bitcoin mining. For example, in April 2021, the 55 MW gas-burning Fortistar-North Tonawanda plant outside Buffalo, New York applied for permit for this type of conversion. If approved, a Canadian Bitcoin operator would acquire the plant and run it as a cryptocurrency mining operation.

As this article was going to print, we learned about two new sources of energy to power Bitcoin mining in nearby Pennsylvania. On July 29, 2021, the Pittsburgh Post-Gazette published a report about a coal plant in Venango County (just northwest of Pittsburgh) that is being transformed into a cryptocurrency operation, burning waste coal. Two nuclear power plants—one in Beaver County that will supply energy to a mining operation in Ohio, and another in Luzerne County. The nuclear plant in Luzerne County will house its own data center to mine Bitcoin, using up to 12% of the facilities capacity.

Want to help the climate? Bitcoin will send the CO2 numbers in the wrong direction

Environmentalists and policy-makers in Montana have tried to slow down the expansion of cryptocurrency mining’s climate impacts through implementation of zoning restrictions.

In New York State, environmental groups have worked with legislators to draft rule-making. They have sent a  letter to Governor Cuomo’s Department of Environmental Conservation (DEC).  Earthjustice and the Atlantic Chapter of the Sierra Club warned that nearly 30 other upstate New York power plants could be converted to run full-time as data centers, with catastrophic consequences for statewide CO2-equivalent emissions. Governor Cuomo has positioned New York as a leader on climate, instituting the Climate Leadership and Community Protection Act (CLCPA), designed to reduce greenhouse gas emissions. Bitcoin miners have discovered a loophole: by buying up old power plants to generate power for private use, thus operating “behind the meter” (by not supplying power to the grid for public consumption), they’re able to evade New York’s CLCPA requirement, which stipulates that 70% of our grid’s electricity must come from renewable sources by 2030.

Greenidge calls itself a “carbon neutral” facility, because it now purchases carbon offsets, but opponents argue that carbon offsets are a form of public relations greenwashing that does little to protect communities from this industry’s pollution, nor does the CLCPA permit power plants to use carbon offsets.

In recent news, Greenidge announced that profits from their Bitcoin mining operation at Greenidge would be channeled into the closure of the former coal-burning plant’s ash waste pile (see Figure 6, below). The pile is located directly across State Rt. 14 from the plant facility. Greenidge hopes to transform this coal waste pile into a solar farm that would generate 5 MW of power. A majority of the mining operation’s 85 MW power needs at the Dresden site would still come from on-site burning of gas, however.

Figure 6: Arsenic levels in groundwater at the Lockwood Ash Disposal site near the Greenidge Generating plant exceeded EPA standards 75% of the time from 2014 to 2016. The highest concentration measured was twice the EPA health standard. Source: ashtracker.org

Repurposing of coal ash piles for solar farms is a controversial topic, and considered by some to be merely “green-washing”.  While some proponents of solar farms consider the coal waste piles a productive use of toxic brownfields, others feel that groundwater flow beneath the piles may transport heavy metal contamination off-site, and imperil nearby water quality. According to Earthjustice, the status of the Lockwood ash pile’s liner has not been disclosed.

Earthjustice maintains that inadequately-lined and/or capped landfill is at risk of contaminating groundwater if the toxic materials are not physically isolated from adjacent soil. Legal and technical experts from Earthjustice, the Environmental Integrity Project, and partner organizations located and analyzed data disclosed to the EPA by industry about ash waste ponds. These partners found that 95% of these ponds are not lined, based on industry’s own data. Of the 738 disposal ponds reported, 91% sites are contaminating groundwater with toxic substances at levels that exceed federal safety standards. Data for dry piles is not as readily available, but the trend does not seem favorable.

Who’s next?

Opponents of Bitcoin mining, like Seneca Lake Guardian, Sierra Club, and others warn that any community could be next. They don’t want this little understood, relatively new industry to become a town-by-town fight as predatory corporations seek to expand, exploiting community’s natural resources for private gain while giving very little back in return.

As other countries like China crack down on Bitcoin because it’s defeating their climate goals and robbing power from the public, these miners are moving rapidly across the US because there are currently no regulations on this industry. Miners are setting up shop across the country, from Massena, New York to Missoula, Montana, and towns are learning first-hand, often after the fact, how damaging the impacts can be.

President Biden has developed his Build Back Better initiative which contains a strong climate component, and the US has rejoined the Paris Climate Accord, but will New York and the US be partners with the nation and the world in achieving climate goals, or allow this industry to singlehandedly undermine our plans to reduce greenhouse gases? That’s something that media from around the world is watching and reporting on.

This is no longer a small upstate New York issue, it’s a nationwide problem, and that’s why elected officials and national environmental watchdog organizations are chiming in as they learn of the impacts.

Looking to the future

No one wants to stop the wave of the future, and nobody is opposed to cryptocurrency in general, or even against Bitcoin, in particular. But the future of the planet looks bleak unless proof-of-work cryptocurrency changes its climate-busting model. We must encourage cryptocurrency operations to use 200% renewables. This means that they should both use renewable energy sources to power their machines, while also not robbing those valuable renewable energy resources from the public. They would not be only powering themselves with renewables, but simultaneously producing an equal amount of renewable energy for the public power grid. In the meantime, the US must push for a moratorium to study proof-of-work’s impacts on air, water, climate and the long-term economy while the Bitcoin industry works to become more sustainable.

The US is positioned to set an example for the rest of the world.

The Take Away

Climate change threatens the health, welfare, and economy of the state with increasingly severe and widespread impacts to our communities due to flooding, sea level rise, heat waves, coastal erosion, erratic and unpredictable weather patterns, shifting climactic zones, loss of wildlife, increased harmful algal blooms and invasive species, and increased risk of disease. If Governor Cuomo wants to lead the nation on climate, he has to address the impacts of proof of work cryptocurrency mining industry in New York.

8/4/21 Since publication, this article was modified to correct a statement regarding the amount of emissions requested in Greenidge Generation LLC’s air permit application, and to include information about the Fortistar-North Tonawanda gas plant outside Buffalo, New York.  

8/10/21 This article was modified to correct an erroneous statement about NOx being a greenhouse gas. It is not.

What can you do?

In New York, statewide groups are asking concerned citizens to:

• Ask their state legislators to support legislation that would place a moratorium on any new or expanding Bitcoin operations in the state of New York until a comprehensive study of the industry and its impacts on air, water, human health and agriculture can be fully evaluated.
• Call Governor Cuomo: (518)-474-8390. Tell him that unregulated “behind the meter” Bitcoin operations completely evade his Climate Leadership and Community Protection Act (CLCPA), and that he must direct his DEC to deny Greenidge’s Title V air permit renewal.

Elsewhere:

• Talk to your municipal and state-wide policy makers about climate impacts from cryptocurrency mining
• Watch for announcements about plans to repurpose retired electrical generating stations in your community
• Reduce your overall carbon footprint by examining your consumption patterns, insulating your home, and switching to renewable energy sources like roof-top or community solar, air- or ground-source heat pumps, or wind energy.

References & Where to Learn More

Retired power plants: Data retrieved from United States Energy Information Administration (EIA) by FracTracker Alliance, April 2021, with a focus on the “Retired” tab. https://www.eia.gov/electricity/data/eia860M.

Active power plants: Data from United States Energy Information Administration (EIA), April 2020. Downloaded by FracTracker Alliance, October 2020. https://www.eia.gov/maps/layer_info-m.php.

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