New York faces new legal battle over proposed crypto-mining powerhouse

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Environmental groups are pushing New York state to scrutinize the purchase of a gas-fired power plant by a crypto mining company, arguing in a new lawsuit that turning the power plant into a crypto mine would go against the rules state climate goals and dumping more pollution into nearby neighborhoods. .

The Sierra Club and the Clean Air Coalition of Western New York filed a lawsuit Friday challenging the New York Public Service Commission’s (PSC) approval of the sale. Under state law, the commission must give the go-ahead before the transfer of ownership of a power plant can take place. So far, the commission has mainly focused on whether such a sale would affect residents’ electricity rates or create a monopoly. The commission must begin to consider climate change and environmental injustice due to a sweeping climate law passed in 2019, according to the new lawsuit.

The Law Says You Can’t Just Ignore These Really Serious Consequences

The law says you can’t just ignore these really serious consequences, says Dror Ladin, senior attorney at Earthjustice, the nonprofit environmental law group representing the plaintiffs. Running the factory around the clock to mine crypto is going to be very bad for both the climate and the people in the area.

The power plant, called Fortistar, is in the small town of North Tonawanda, located between Buffalo and Niagara Falls. Typically, Fortistar is operated as a so-called peaking power plant, turning on infrequently to meet peak electricity demand during an energy crisis. The plant has only operated between 10 and 25 days a year since 2017, according to Environmental Protection Agency records cited in the complaint. That timeline is set to change drastically if Canadian crypto-mining company Digihost moves in, which is why some residents are worried about their potential new neighbor.

Digihost asked the PSC to approve the purchase of Fortistar in April 2021. It planned to run the plant 24/7 to power its crypto-mining rigs, according to an EA form which the company filed in North Tonawanda later that year. Crypto companies consume huge amounts of electricity to mine Bitcoin, more than many small countries use in a single year. To validate new transactions on the Bitcoins blockchain and earn new tokens in return, miners must solve challenging computer puzzles using specialized hardware. The more materials and energy you use, the better your chances of earning new tokens.

This produces a lot of pollution in the process, especially for operations that get all their electricity from a gas-fired plant like Fortistar. Thus, some local residents fear that if Fortistar starts operating 24/7, it would increase its environmental footprint.

My eldest son has asthma and I worry about how the pollution will affect him, writes a resident who lives about a quarter mile from the gasworks in an affidavit accompanying the complaint from environmental groups. I have chronic obstructive pulmonary disease and I’m also worried that the increased pollution will make my condition worse.

New York also has its climate goals to consider. The state has pledged to reduce its greenhouse gas emissions by at least 85% by 2050. To achieve this goal, the climate law it passed in 2019 requires agencies to the state consider whether its decisions would jeopardize these goals or disproportionately burden disadvantaged communities. While the state is still finalizing criteria for what makes a disadvantaged community, some census tracts near Fortistar have already been shown to handle more pollution than 90% of the state.

Nonetheless, the New York Public Service Commission has approved Digihosts’ petition to purchase the plant in September 2022. While many commentators raise significant environmental concerns…these issues are beyond the scope of the limited review. undertaken in this proceeding, the PSC wrote in its decision.

The lawsuit filed Friday is the first to push the CPS to broaden the scope of its decision-making, citing New York’s climate law. If the environmental groups are successful, the commission is expected to rethink its approval of Digihosts’ planned takeover of the plant. At this point, Digihost might struggle to convince the state that its new crypto mine wouldn’t jeopardize climate goals.

In a similar fight against a crypto-mining powerhouse in New York called Greenidge, the state Department of Conservation denied aerial permits because its operations would be inconsistent with greenhouse gas emissions limits. statewide established in the Climate Act. In November, Governor Kathy Hochul signed a two-year moratorium on new permits for fossil fuel power plants seeking to mine Bitcoin. This gives the state time to conduct an environmental impact assessment of crypto mining more broadly.

Both Greenidge and Fortisar are excluded from this moratorium because they had applied for air permits before the law was passed. Greenidge is still operational as he appeals the state’s decision on his air license. But conservationists are optimistic they could stop a crypto mine at Fortistar from taking off.

Neither Digihost nor Fortistar responded to a request for comment from The Verge, while the PSC said in an email that it does not comment on ongoing litigation. Digihost, of course, still has to contend with the ongoing crypto winter that has made it less profitable to mine Bitcoin. But in a January press release, the company touted a 60% year-over-year increase in its Bitcoin production in 2022. The announcement also states that Digihost has already installed mining infrastructure in North Tonawanda and expects the acquisition to close in the first quarter. of 2023.

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