The next time someone invests in a fraction of a bitcoin, they can thank the thousands of computational devices guzzling energy to solve a math problem at a Finger Lakes power plant.
A former public coal-powered plant turned private Bitcoin mining operation located just off the shore of Seneca Lake, Greenidge Generation, is currently vying to renew its license to continue operations. Cornell professors are arguing that this renewal could bring millions of tons of carbon emissions to the state.
With the facility on the cusp of receiving a license renewal, faculty like Prof. Eswar Prasad, applied economics and policy, insist that allowing Bitcoin mining in power plants would be an unbefitting use of energy as the increasingly detrimental effects of climate change continue to take shape.
Bitcoin mining, explained
“Bitcoin is a decentralized cryptocurrency,” Prasad said. “In other words, anyone with a computer could conduct transactions without relying on traditional paper currency or having a credit card or bank account, and without having to reveal their real identities.”
As volatile as the currency is, the value of bitcoin has skyrocketed over the course of the last 10 years, jumping from just a fraction of a penny to well over $45,000. While the cryptocurrency has largely turned into a financial asset, the actual mining of Bitcoin — or the process by which new bitcoins are entered into circulation — requires the work of powerful, advanced computers to solve an extremely complex math problem. The first computer to solve that problem is awarded the bitcoin.
Bitcoin mining is mainly carried out on specialized devices known as application-specific integrated circuits, according to Prasad. He added that it is not uncommon for miners to buy hundreds to thousands of these devices for Bitcoin optimization, as more computational power results in a better chance of being the first to solve cryptographic problems.
These special mining devices, however, often produce a lot of e-waste and ultimately require an immense amount of electricity, explained Prof. Ari Juels, faculty member at the Jacobs Technion-Cornell Institute.
The electricity used to operate these plants is not just used to power the computers that create bitcoins — it’s also used to cool them. Just as portable laptops have cooling systems embedded within them to keep them from overheating, ASICs also require immense amounts of air conditioning to prevent significant heat damage to hardware.
“[It’s] estimated that validating a single transaction on the Bitcoin network require[s] power consumption equivalent to that of an average U.S. household over about a month,” Prasad said. Currently, the Greenidge facility is generating approximately eight bitcoins every day.
The carbon footprint of Bitcoin mining
Prof. Anthony Ingraffea, civil and environmental engineering, has been outspoken about the harmful effects of Bitcoin’s carbon footprint.
“The issue that I am personally concerned about, is the environmental impact [of cryptocurrency mining], specifically the greenhouse gas emission impact,” Ingraffea said.
During his testimony on Oct. 27 to the New York State Assembly in the case against the Greenidge plant license renewal, Ingraffea discussed the amount of greenhouse gases being released by the Greenidge facility, and the facility’s attempt to falsely advertise itself as green.
The Greenridge facility is performing mining operations at the highest available greenhouse gas emission rate, Ingraffea said. Electricity — whether it’s generated through fossil fuel sources, like coal or oil, or non-fossil fuel sources, like renewables — is needed to keep these thousands of computers running.
“[This facility is] burning natural gas to generate electricity, specifically for the purpose of cryptocurrency operations, but they’re using the dirtiest possible [electricity] in the least efficient way of doing their operation,” Ingraffea said.
Only about 30 percent of the energy in the natural gas that’s burned is converted into electricity, Ingraffea explained. With such an inefficient operation, he estimated that the Greenidge plant is emitting one metric ton of greenhouse gases for every megawatt hour of electricity.
“It cannot get any worse than that,” Ingraffea said.
Of the two recommendations Ingraffea made during his testimony to the state assembly, the first said that the plant must establish a minimum efficiency if the Department of Environmental Conservation decides to renew the license to operate it.
Power plants should be at least twice as efficient, releasing at most half a metric ton per megawatt hour, Ingraffea explained. That way, about 75 percent of the energy in the natural gas will be converted to electricity.
In an effort to renew its license, the Greenidge plant has been advertising itself as “green” — a claim Ingraffea described as “fantastical.” The plant claims that they will be adding up to 17 megawatts of solar farm capacity on their site, reducing greenhouse gas emissions by 12 to 18 percent.
However, according to Ingraffea, solar panels in New York State do not operate at 100 percent efficiency — instead they operate at about 15 percent.
“At best, they’re reducing their emissions by 2.5 percent,” Ingraffea said. “So they’re a long way away from being green.”
Potential risks of future expansion
There are also additional concerns over what would happen if this one plant, already in operation, is replicated by other private investment firms for cryptocurrency mining.
According to Ingraffea, there are five former coal-fired power plants in Upstate New York alone that have the potential to be turned into cryptocurrency operations. Running at full power, these plants would have the capacity of approximately 1,800 megawatts — 18 times that of Greenidge alone.
With the five plants operating around the clock, they would release about 18 million megatons of greenhouse gases per year, Ingraffea explained.
But that’s not the only reason this number is problematic.
In 2019, New York passed the Climate Leadership and Community Protection Act, which set strict limits on greenhouse gas emissions for the state. By law, New York State cannot generate more than 250 million tons of greenhouse gases by 2030. However, if all these plants were to go into operation, private cryptocurrency operations would be accounting for eight percent of the state target.
“The rest of us in New York State would have to double down and reduce emissions from our homes, from our cars, from our businesses to accommodate for this increase in emissions,” Ingraffea explained. “And that’s fundamentally not fair.”
Ingraffea’s second recommendation to the DEC concluded that cryptocurrency operations should only be permitted if they’re supported by renewable energy.
“This renewable energy should be developed, owned, operated and used by the operator of the cryptocurrency facility as its only source of electrical power,” Ingraffea said.
Beyond the environmental costs of Bitcoin, Prasad also argued that the broader economic impact of Bitcoin is minimal at best.
“Given that all of the activity on the Bitcoin network is virtual, other than the mining operations which require hardware and attendant resources, there is little economic gain from these activities for the location in which mining operations are conducted,” Prasad said.
Prasad added that the tax consequences are also not obvious. Even if the cryptocurrency mining itself occurs in New York State, facilities can easily evade tax obligations if the firms are headquartered in lower-tax jurisdictions.
On the other hand, the consequences of environmental damage caused by cryptocurrency mining will remain local to New York and could take a very long time to reverse.
“In short, [even] from a cost-benefit perspective, there is no good argument to be made for supporting the advent of extensive Bitcoin mining operations in New York State,” Prasad said.