Some lawmakers are trying to pause bitcoin mining in New York. They’re facing an uphill battle.

Energy-sucking bitcoin operations are taking over old polluting power plants and siphoning off hydropower from the public.

Assembly Member Anna Kelles is sponsoring a moratorium bill.

Assembly Member Anna Kelles is sponsoring a moratorium bill. Seneca Lake Guardian

When the North Country city of Plattsburgh enacted a first-in-the-nation ban on cryptocurrency mining in 2018, it was because of nonstop noise and rising energy bills due to the city’s power quota. Environmental concerns about the energy demands of bitcoin mining weren’t yet on too many Plattsburgh residents’ radar. “Nobody knew, back then, much about bitcoin,” said Colin Read, who was mayor of Plattsburgh at the time.

In New York today, the debate over bitcoin mining has become primarily focused on its environmental effects. Bitcoin mining is a controversial – and now closely watched – practice because of the massive amount of energy that one particular type of mining used for bitcoins, known as proof-of-work mining, consumes. In proof-of-work mining, many computers compete against each other to solve complex puzzles that allow miners to verify transactions and unlock new coins.

And even just four years ago, Read said, bitcoin mining’s carbon footprint was a fraction of what it is today. That’s in part thanks to the design of the virtual currency, which becomes more difficult to mine as more people participate in mining. As the state continues to experience a boom in bitcoin mining, some state lawmakers are trying to block new mining sites at fossil fuel plants with a proposed statewide moratorium.

Even New Yorkers who aren’t entirely sure what bitcoin mining is may have heard of Greenidge Generation, a converted natural gas power plant near Seneca Lake that is powering energy intensive proof-of-work mining. Greenidge is in the process of renewing key state permits for its plant, including an air pollution control permit required for large emitters like power plants. In its decision, the state Department of Environmental Conservation must consider whether Greenidge’s greenhouse gas emissions are in compliance with the standards set by the landmark Climate Leadership and Community Protection Act. The 2019 law requires, among other benchmarks, a 40% reduction in state greenhouse gas emissions (from 1990 levels) by 2030. In initial statements, the state has said Greenidge hasn’t yet demonstrated compliance with the new law.

For over a year, residents and environmental advocacy groups like Seneca Lake Guardian have protested the plant, called for the state to deny Greenidge renewed permits and advocated for a statewide moratorium on proof-of-work mining to halt more operations like Greenidge from moving into New York. Although the impending decision is a routine permit renewal, some now consider it a bellwether for New York’s tolerance for more sites like Greenidge. “We view Greenidge as the test case for how the other underutilized or decommissioned power plants throughout New York state will fall. If (the permit renewal) is denied, that would sort of cast an unfortunate future for proof-of-work miners who want to resurrect old fossil fuel burning plants to mine bitcoin,” said Yvonne Taylor, the vice president of Seneca Lake Guardian. “If it’s approved, however, you'll see facilities like Greenidge popping up all over the state.” Greenidge has noted that previous state Department of Environmental Conservation decisions have explicitly said the state’s review of one facility’s compliance with the climate law isn’t influenced by what happens at other facilities.

On the last day of March, the state for a second time delayed a decision on whether or not to renew Greenidge’s permits. Advocates and lawmakers like Assembly Member Anna Kelles – who is sponsoring a moratorium bill – have cast the delay as a politically motivated decision by Gov. Kathy Hochul, noting that the new deadline is scheduled after the Democratic gubernatorial primary. (New York City Public Advocate Jumaane Williams, who is running to the left of Hochul in the primary, made a campaign stop in the Finger Lakes earlier this year to call for statewide regulation of proof-of-work mining.) Representatives for Hochul did not respond to a request for comment, but a spokesperson for the state Department of Environmental Conservation said that it was solely the department’s decision to extend the renewal deadline in order to review additional material from Greenidge.

While Greenidge may be the most high-profile bitcoin mining operation in New York, it’s far from the only one. At least a dozen such sites are operating or in the works across the state, though some are smaller operations and draw their energy from the grid, not power plants they operate themselves. Many are scattered across upstate New York, where there’s easy access to plentiful hydropower. The actual number of mining companies operating in New York is unknown. Kyle Schneps, director of public policy at Foundry USA, a Rochester-based company and the largest “pool” of bitcoin miners in the U.S, told City & State that 13% to 14% of its mining in the country happens in New York. Mining pools are network that allows individuals or private companies – as opposed to large companies that run their own plants – to collaborate on mining bitcoin together and share revenue.

Cheap power and abandoned infrastructure lures miners

The locales chosen for bitcoin mining have a few things in common; they’re often situated on the banks of plentiful sources of water, frequently set up in abandoned factories and power plants with connections to the grid, in former industrial towns where mining companies can make a convincing case for job creation. Greenidge said that it employs 50 people and has grown even through the COVID-19 pandemic, paying salaries of an average of approximately $80,000 a year.

Critics argue that job creation is paltry. “They’re not a driver of jobs,” Read, the former Plattsburgh mayor, said of bitcoin mining companies. “We had a plastics company that was using half the power and generating 400 or 500 jobs.”

A cluster of bitcoin mining operations can be found in and around Niagara Falls. Cryptominers are relying on the natural wonder of the Falls as much as the area relies on it for tourism revenue. One such company is Blockfusion, which bought and converted a former fossil fuel plant into what it calls a “nearly carbon free” hydropower operation. Blockfusion is one of several sites in New York that either currently relies on renewable energy or plans to transition to it. In an op-ed in The Buffalo News arguing that its reliance on renewable energy is an example of bitcoin mining done right, CEO Alex Martini wrote that the site employs more than 55 “area residents.”

Another company, Digihost, boasts two locations in Western in New York. One of its sites is in North Tonawanda, outside of a natural gas power plant. Digihost has a deal to purchase the plant – and use it to power its mining work – but is awaiting approval on the sale from the state Public Service Commission. The company has said that it plans to convert the plant to produce “renewable natural gas” before fully transitioning to renewable energy.

Though the growing cryptocurrency mining industry is not uniform, environmental advocates said they are concerned with all proof-of-work mining operations, even ones relying mainly on renewable energy. “New York state has a climate law with a goal of obtaining 70% renewable energy for the state within the next eight years,” Taylor, the vice president of Seneca Lake Guardian, said. Though Taylor noted that New York State Energy Resource Development Authority – which along with the state Department of Environmental Conservation is tasked with developing a framework to achieve the state’s climate goals – has said the state is on track to meet the renewable energy goal, she said bitcoin mining could make it more difficult to achieve. “If more crypto miners start siphoning those renewables off and take them away from the public, it makes it much more difficult for the public to access those renewable energy resources, and it becomes more costly as well.”

Greenhouse gas emissions have become a top concern, but noise complaints about the computer mining rigs haven’t gone away. Deborah Gondek, a resident of North Tonawanda, is among the locals who have complained about the “buzzing-humming” noise coming from Digihost’s testing of its equipment outside the power plant it aims to take over. Gondek and several others filed a suit to halt the project, but it was dismissed. “Hundreds of people, people up to a mile away, could hear it during testing,” Gondek said. “That was just running a few units, they’re not fully up and running yet.” Digihost did not respond to a request for comment, but the company said in February that the outdoor testing of its equipment is temporary and will be moved into more insulated pods.

Other mining sites are nondescript, like operations run out of roadside shipping containers in Massena, a town on the state’s northern Canadian border. Plattsburgh still has at least two companies conducting proof-of-work mining, including Coinmint, which houses its equipment in shipping containers in Plattsburgh’s Skyway Plaza strip mall. Coinmint and another company called Zafra were both in Plattsburgh before the moratorium and were allowed to operate – but not expand – while it was in place. After less than a year, Plattsburgh lifted its moratorium on mining in 2019, with a new regulation in place that requires the extra costs incurred by the city going over its power quota to be passed on to miners. 

A patchwork of local regulations 

Coinmint, which, according to its website was founded to benefit “exclusively high net worth private clients,” now runs a much larger operation out of a former aluminum smelter in Massena, and the company is in the midst of its own moratorium battle. Though Plattsburgh was the first to implement a temporary moratorium, several other localities – including Niagara Falls, Massena and the Village of Sherburne – have followed. Massena, a former industrial town on the state’s northern border with Canada, recently extended a moratorium on any new operations until the end of April as it considers regulations on mining.

Read said that Plattsburgh’s moratorium gave the city time to petition for and receive a rider from the Public Service Commission that passes power overage costs onto miners. Though he’s no longer the mayor, Read said he didn’t see much interest from miners after the regulation went into effect. “We have not had any applications to speak of since then,” Read said. “It stopped it right in the bud.”

Environmental advocates are seeking more than local moratoriums, though. A proposed statewide two-year moratorium that is moving through the state Legislature would directly block new sites that look like Greenidge from setting up shop in New York going forward. The bill, sponsored by Kelles and state Sen. Kevin Parker, would also require a general environmental impact statement on proof-of-work mining. But the proposed moratorium bill wouldn’t directly ban the practice of proof-of-work mining or require existing sites to pack up their whirring supercomputers and industrial sized cooling fans. It would only restrict the state from approving any new or renewed permits for fossil fuel burning plants being used to power behind-the-meter proof-of-work mining. It would not keep miners from setting up operations in roadside shipping containers, for example, but advocates call it an important first step.

An earlier version of the bill failed to progress last session, in part due to opposition from construction unions whose members could benefit from the creation of new mining sites. Kelles said she feels confident about the legislation’s chances this session. “We have worked closely with unions, we have worked closely with environmentalists and scientists, legislators,” Kelles said. “I feel very confident in the version that we have. And it's moving.”

Cryptocurrency companies have become a lobbying force in Albany, and the legislation still faces opposition from IBEW Local 840. The electrical workers union said in an emailed press release that the moratorium legislation would hamper the growth of the technology sector across the state. “New York should be embracing emerging technology, financial security and the job opportunities for our members and new apprentices in construction and operations AND the high-tech jobs this industry brings to communities throughout the state,” the release read.

Assembly Member Clyde Vanel, a longtime proponent of cryptocurrency and blockchain technology, said that he doesn’t support the Kelles/Parker bill. “I’m supportive of a study, not a moratorium,” Vanel said, adding that the state should be able to study the impact of the industry while not hampering its growth. Vanel sponsors a bill to create a cryptocurrency and blockchain task force that recently passed the Assembly and is under consideration in the state Senate. IBEW Local 840 supports that bill, which would broadly study crypto and its underlying technology, including a review of the energy consumption necessary for mining operations and potential policy considerations.

Despite bitcoin mining gaining increased attention in the state Legislature this year, Hochul has been mum about the idea of a moratorium or other crackdowns on the practice. Environmental advocates and Kelles, however, have made no secret of their belief she’s stalling on weighing in on the issue until after the primary.  “It just so happens that the new deadline is two days after the primary,” Kelles said at a press conference reacting to the delay of a decision on Greenidge’s air permit. “It feels very political.”