When the State of New York enacted the Climate Leadership and Community Protection Act (CLCPA)in 2019, legislation which mandated an emissions free grid by 2040 and a carbon neutral society by 2050, lawmakers did not factor in the obstacles created by fossil fueled cryptocurrency operations. Cryptocurrency – which can come in many forms like Bitcoin, Litecoin, Ethereum, Ripple, Stellar (etc.) – is a digital asset designed to serve as an alternative currency where individual coin ownership records are stored in a computerized database. The technology uses strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership. While this technology is making some wealthy investors richer, the process can be incredibly energy intensive and could derail NY’s climate goals if not carefully regulated. The most pernicious form of cryptocurrency is what is called “proof of work,” which requires its creators to expend significant effort solving an arbitrary mathematical puzzle in order to prevent interlopers from gaming the system. But these complex computations require powerful computers - which in turn require a lot of energy.
Several major corporations have been looking to exploit loopholes in New York’s regulatory structure by targeting retiring, retired, or peaking power plants for data centers, bitcoin mining, and the like. While the Public Service Commission (PSC) regulates grid-tied power plants, energy consumptive bitcoin mining facilities, which are massive warehouses packed with mainframe computers, can absorb a generating plant’s entire electrical output - off-grid and behind-the-meter - evading PSC oversight. Even the first air & water permits issued by the Department of Environmental Conservation (DEC) for the first cryptocurrency tied powerplant came with the misconception that the plant was to provide power for a few weeks a year as a peaker plant – not the perpetual operation that is powering the current bitcoin mining operation. In the case of the recently converted coal plant (Greenidge) in Dresden, NY, the new gas turbines could soon run 24 hours a day, 7 days a week – with an output sufficient to power 93,000 homes –just to produce 5 bitcoins a day. This under-regulated activity, with no discernable public benefit, has an enormous carbon footprint, and with proposals now spreading to other sites across NY we fear it could significantly undermine the emissions reduction goals of the CLCPA. In fact, if the gap in regulation for behind-the-meter cryptocurrency operations is not closed by the legislature, or the governor – this kind of digital partnership could be an integral part of every power plant operating in NY – which could profoundly impact environmental justice communities, their air quality and the affordability of electricity.
The Sierra Club, working with local partners, is suing to stop the expansion of the Greenidge Bitcoin facility. On the statewide level, we are working with EarthJustice to push DEC to take a more proactive look at future proposals. It was also our greatest hope that the legislature would help us in this fight.
In the final weeks of the 2021 legislative session, a bill was introduced in both houses A.7389/S.6486 that would establish a moratorium on the operation of cryptocurrency mining operations in NY until a full generic environmental impact statement has determined whether such operations can be mitigated to comply with the CLCPA and other applicable environmental rules and regulations. The bill passed the senate but languished in the Assembly despite valiant efforts by the bill’s sponsor Assembly member Dr. Anna Kelles (D-Ithaca) to rally her colleagues to understand the consequences of inaction. Unfortunately, as with many other pressing environmental issues, the Assembly’s failure to pass this legislation redirects attention to the governor for executive action.
Urgency for the governor to act comes at a time when cryptocurrency operators are in a state of flux. Previously, the majority of bitcoin mining was done in China, but the Chinese government is now shutting down their mainland operations because cryptocurrency is causing disruption to energy reliability and derailing climate goals. New York has become an attractive new base of operation for facilities because of the number of shuttered old fossil fuel plants, an abundance of cooling water, lax regulations, and the precedent set by the Greenidge bitcoin mining operation on Seneca Lake. Previously, it was advantageous to locate next to the cheapest power source. Now, the cryptocurrency miner can buy the power source itself at rock bottom prices. Fossil fuel plants displaced by cleaner energy sources are available across the state from Long Island to Western New York. Recently, a fracked gas powered plant in North Tonawanda (between Buffalo and Niagara Falls) was purchased by a Canadian bitcoin miner, and they have already purchased the data mining processors for their new operation.
To stop the further spread of Proof-of-work cryptocurrency, NY needs to officially weigh the impacts of cryptocurrency mining against our CLCPA goals and set appropriate prohibitions and mitigations. With the inaction by the Assembly this year on this fast-moving issue, the governor should treat cryptocurrency operations in the same fashion that the state dealt with the hydrofracking industry, culminating in the 2014 ban through the State Environmental Quality Review Act process. It is time to have the Department of Environmental Conservation issue an administrative pause and do a generic environmental impact study on cryptocurrency before climate-killing bitcoin operations become established across the state.