On the shores of Seneca Lake, a former coal power plant has been revitalized, to fit the modern age of money. Instead of firing up coal, it fires up computers.
Greenidge Generation LLC mines Bitcoin out of a mothballed power plant in Dresden, New York. They’re mining close to eight Bitcoins a day, and, as of this week, a Bitcoin is worth almost $60,000. They claim to be carbon neutral, but they’ve taken a lot of heat for the environmental effects of their activities, which include warming the Seneca Lake waters and causing harmful algal blooms. The mining process is incredibly energy-intensive — in fact, Bitcoin uses more electricity than many countries and about as much as the entire state of Washington each year. And the environmental effects of this process can be dangerous.
We should take a step back and understand how cryptocurrency, and proof of work crypto in particular, function.
Crypto is undoubtedly revolutionary and a crucial part of our future in the decentralization and democratization of currency. Cryptocurrencies are based on blockchain, and unlike fiat currencies, there’s no federal reserve or central authority backing the money. This can be a really good thing.
While fiat currencies like the dollar are so concentrated at the top, allowing the wealthy to only get wealthier, cryptocurrencies can offer a change of pace. “The fundamental draw of cryptocurrencies is that by their nature, because they’re decentralized, they have the potential to be more democratic and accessible,” said Assemblywoman Anna Kelles when I spoke with her recently.
At first, anyone could mine Bitcoin on their laptop. Bitcoin is a proof of work currency, which means that to mine it, you have to run your computer to solve an arbitrary mathematical equation — the solution creates the coin. This is a form of validation for the currency, so it can avoid crazy inflation without the presence of a central authority. As more of the coin is produced, and more people enter the market, the harder the equations become.
This means that now, if you want to mine a proof of work currency like Bitcoin, and make money, you can’t do it on your laptop. You need way more power.
According to Assemblywoman Kelles, Greenidge soon plans to have as many as 30,000 computers, running constantly. To keep this plant powered, they have to use tons and tons of electricity, powered by natural gas, and additionally they have to use energy to cool the computers so they don’t overheat.
In addition to being extremely wasteful (in both energy and e-waste), this phenomenon, in a way, undermines the notion of democratization that’s so instrumental to crypto generally. Now, to mine Bitcoin successfully, you have to own lots of hardware, and afford high energy bills.
There are alternative forms of cryptocurrency authentication that are less energy-intensive: take proof of stake, for example. Proof of stake cryptos like Ethereum require less energy to mine and are marketed as the more sustainable future of crypto. It doesn’t require extensive hardware and it can still be mined on a laptop.
Currently, Greenidge’s permits are up for renewal, and this is a huge deal. When Greenidge moved in, the mine was originally supposed to be a peaker plant, providing power to the public in times of high demand, according to Yvonne Taylor of the Seneca Guardian, an organization dedicated to protecting the Finger Lakes. They were originally given permits for this purpose, and Taylor says that the permits for operation, originally granted by the Department of Environmental Conservation (DEC), were basically the same ones that the old coal-fired power plant had, which predate the Clean Water Act. So their permits are outdated, and inaccurate to the work they’re actually doing now.
Assemblywoman Kelles says that Greenidge then signed a deal using “excess” energy — the orangery that isn’t provided to the public — to mine Bitcoin. She said that as the price of Bitcoin has gone up, the percent of energy going to the grid has gone down, and more has been used as “excess” for mining. Meanwhile, they’re using around 130 million gallons of water a day from the lake to cool the operation.
In upstate New York, there are many other power plants like the one in Dresden that could be repurposed into Bitcoin mines. If the project is allowed to continue at Greenidge, it could set a dangerous precedent.
This question of proof of work crypto and its environmental effects is a massive one in New York state, and it was a topic of a recent public hearing in the New York State Assembly. There, Anthony R. Ingraffea, the Dwight C. Baum Professor of Engineering, Emeritus, at Cornell discussed three reasons why this is problematic.
“The first point is that the Greenidge Plant currently performs cryptocurrency operations at the highest available greenhouse gas emission rate. The second point is that the alleged greening of the Greendige plant via promised solar energy is nothing short of fantastical. And the third and more general point is that if all five former coal fired power plants in upstate New York are permitted for cryptocurrency operations using natural gas, the estimated yearly emissions could exceed 18 million metric tons of CO2e [carbon dioxide equivalent], and that would be over 8% of our state’s 2030 target of 250 million tons of greenhouse gas emissions,” he said.
Luckily, the head of the DEC recently tweeted that Greenidge is not in compliance with state law, so we can hope that future plants will not copy their model. But, this is not an issue that will go away.
Crypto and Bitcoin will continue to play a big role in our future — in some ways for good: non-proof-of-work cryptocurrencies can offer the democratization promised of decentralized currency. This topic will certainly be the source of debate and conversation for a long time, and there is more talk to be had about how it affects New York and the country. But today we have to prioritize above all else protecting our environment and our planet, and that means being cautious about Bitcoin.
Daniel Bernstein is a junior in the College of Arts and Sciences. He can be reached at [email protected] Feel the Bern runs every other Monday this semester.