Will industrial-scale bitcoin mining impact the environment?

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The opportunity to make big bucks attracts huge investments in industrial-scale bitcoin mining, with thousands of supercomputer mining machines and huge demand for energy – so much energy that some companies use power plants to power their operations.

Critics fear it could have significant environmental consequences, reports CBS News meteorologist and climate specialist Jeff Berardelli.

Yvonne Taylor’s family has lived along the shores of Seneca Lake, an idyllic location nestled in New York’s scenic Finger Lakes region, for seven generations.

“It’s spectacular here,” she said. “We have waterfalls, gorges, water to swim in, fresh water to drink, an abundance of agriculture, wine, tourism. It’s a piece of heaven here.”

But now she says her piece of paradise is under threat. Taylor is a leader of Seneca Lake Guardian, an environmental watchdog engaged in a battle for a once-closed power plant.

The plant, named Greenidge Generation, has been dormant for more than five years. It was converted from coal to natural gas and re-ignited in 2017 by a private investment company with the aim of supplying electricity to the grid.

Now, in addition to providing electricity, the company owns an industrial-scale bitcoin mining business on the property, an operation that is growing. Recently, the number of mining machines has doubled from around 7,000 to over 15,000.

According to an SEC filing by Greenidge Generation, in March, the plant provided 19 megawatts of mining capacity. The document shows they expect to more than quadruple by the end of 2022.

Power generation requires millions of gallons of water to be drawn from Seneca Lake to help cool the process. This water is then allowed to be returned to the lake, which is noticeably hotter than it was when it entered it. Some residents fear that the potentially warmer water could upset the balance of the ecosystem.

Tina Hazlitt’s family has owned a farm on Seneca Lake since 1852. “I feel like we are stewards of the land,” she said. “Our roots run deep here.”

There is no evidence that the hot water flow is currently causing environmental damage, but it fears for the future. “What Greenidge is doing threatens our lake and threatens our water,” she said. “And for me, it threatens my grandchildren.”

But Greenidge disagrees. In a series of emails with CBS News, a spokesperson for Greenidge said the city had approved the company’s sitemap; that Greenidge fully respect all of its permits; and that there is no evidence of environmental damage.

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But Hazlitt says given Greenidge’s plan to grow its bitcoin business, further study is crucial.

“We need to raise the red flags and say, ‘Slow down, let’s investigate this. Let’s look at what could really happen to our water, to our air, as a result of the growth in bitcoin mining, ”Hazlitt said.

But why does bitcoin mining require so much energy that it pays to own a power plant?

Each bitcoin transaction activates thousands of supercomputing mining machines, all competing against each other to solve puzzling math problems, each vying to be the first to validate that transaction – and in return, earn new bitcoins. More machines and cheaper power mean more profits.

So, for power plants that are not operating at full capacity, mining can be an attractive new source of income.

But the impacts are not limited to the Finger Lakes region. Emissions from the combustion of natural gas are contributing to climate change, and advocates fear the floodgates are about to open, to reopen closed power plants across the country.

Former Cornell University professor and natural gas expert Tony Ingraffea said outside of New York state there were hundreds of other factories. In New York state, two factories are expected to open quickly, he said. He said the use of power plants to mine bitcoin raises ethical concern, due to carbon dioxide emissions and methane leaks, which are common along the supply chain leading to the plant.

“Methane is, in the short term, a hundred times more powerful than CO2,” said Ingraffea.

Berardelli said: “The UN says the best lever we have to meet our Paris goals is to reduce methane emissions now.”

“Starting bitcoin mining across the country for a private company, regardless of social good, is a very bad thing to do,” said Ingraffea. “We are at the forefront of this phenomenon of mining cryptocurrency by burning natural gas. It will get worse.”

It is a trend that is accelerating. Bitcoin miners are making deals to use or even buy power plants in western New York City, Montana, and Pennsylvania, to name a few.

And critics say the bitcoin industry’s carbon emissions are already immense – larger than the total emissions from Sweden and Switzerland combined.

In fact, a recent study published in Nature Climate Change found that bitcoin mining alone has the potential to catapult us beyond the warming targets set by the Paris Agreement.

“If you look at all the energy consumption of Google, Amazon and Facebook combined, [bitcoin mining] uses more energy than all of them, ”said Anna Kelles, Member of the New York State Assembly. She said the industry was once lucrative for the little guy; now it’s harder to compete.

Berardelli asked, “So bitcoin mining has become an economy of scale?”

“Yes, absolutely,” Kelles replied. “You need to have as many computers as possible and you need those computers online every second of every day.”

She fears the use of power plants for industrial-scale mining could cause emissions to escalate that could undermine New York’s ambitious climate targets. It therefore proposes a moratorium on this type of operation.

“If they can make their way through all of the regulations in New York State, which has some of the toughest regulations in the country, it really sets a precedent,” she said.

Together, Kelles and concerned residents like Yvonne Taylor hope to get ahead of this burgeoning bitcoin phenomenon before, they fear, it gets out of hand.

“We are Anytown, United States,” said Taylor, “and it could happen in any community.”

“We have to nip this in the bud, otherwise everything we do to tackle climate change will be in jeopardy,” she said.

Greenidge told CBS News they bought carbon credits to offset their CO2 emissions from the plant.

Their five-year air permit must now be renewed. In an August letter to the New York Department of Environmental Conservation, Greenidge said he was in compliance with New York’s greenhouse gas emissions targets set by the new law on the environment. weather.

The New York DEC says Greenidge’s application has yet to demonstrate compliance with these requirements.

The DEC has not made a final decision on the permit. Public hearings are scheduled and the DEC is accepting public comments on the renewal until October 22. He also asked Greenidge to submit additional information.

When it comes to cryptocurrency’s carbon footprint, there might be a way to significantly reduce emissions. The second largest cryptocurrency, ethereum, just announced that it is changing the way they verify transactions. They say it will reduce emissions by over 99%.

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