The opportunity to make big money is attracting huge investments to industrial-scale bitcoin mining, with thousands of supercomputer mining machines and enormous energy demand – so much energy that some companies are using power plants to fuel their operations.
Critics fear that may 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 spot nestled in New York's picturesque Finger Lakes region, for seven generations.
"It's spectacular here," she said. "We've got waterfalls, gorges, water to swim in, fresh water to drink, an abundance of agriculture, wine, tourism. It's a piece of heaven right here."
But now, she says her piece of heaven is threatened. Taylor is a leader of Seneca Lake Guardian, an environmental watchdog engaged in a battle over a once-shuttered power plant.
The plant, named Greenidge Generation, lay dormant for more than five years. It was converted from coal to natural gas and fired back up in 2017 by a private investment firm with the intent to supply power to the grid.
Now, in addition to supplying power, the company has an industrial-scale bitcoin mining business on the property, an operation that's been 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 powered 19 megawatts of mining capacity. The document shows they expect that to more than quadruple by the end of 2022.
Producing power requires millions of gallons of water to be drawn from Seneca Lake to help cool the process. That water is then permitted to be sent back into the lake, measurably warmer than it was when it came in. Some residents worry the potentially warmer water may disturb 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's no evidence the warm water outflow is causing environmental damage now, but she fears for the future. "What Greenidge is doing threatens our lake and threatens our water," she said. "And for me, that threatens my grandchildren."
But Greenidge disagrees. In a series of emails with CBS News, a Greenidge spokesperson said the town has approved of the company's site plan; that Greenidge is in full compliance with all of its permits; and that there is no evidence of environmental harm.
But Hazlitt says that given Greenidge's plan to grow their bitcoin business, more study is crucial.
"We need to throw up the red flags and say, 'Slow down, let's investigate this. Let's look into what could really happen to our water, happen to our air, as a result of the growth of bitcoin mining,'" said Hazlitt.
But why does bitcoin mining require so much energy that it pays to own a power plant?
Every bitcoin transaction activates thousands of supercomputing mining machines, all competing against each other to solve puzzling mathematical problems, each vying to be the first to validate that transaction – and in return, win new bitcoin. More machines and cheaper power mean more profit.
So, for power plants not operating at full capacity, mining can be an attractive new revenue stream.
But the impacts aren't isolated to the Finger Lakes region. Emissions from the burning of natural gas contribute to climate change, and advocates are concerned the floodgates are about to open, to open back up shuttered power plants across the nation.
Former Cornell University professor and natural gas expert Tony Ingraffea said outside the state of New York there are hundreds more plants. In New York state, two plants are targeted to quickly open up, he said. He said using power plants to mine bitcoin raises an ethical concern, because of emissions of carbon dioxide, and methane leakage, which is common along the supply chain leading to the plant.
"Methane is, over the short term, a hundred times more potent than CO2," Ingraffea said.
Berardelli said, "The U.N. says the best lever we have to meet our Paris goals is to reduce methane emissions now."
"Firing up bitcoin mining across the country for private enterprise, without regard to social good, is a really bad thing to be doing," Ingraffea said. "We're at the very, very leading edge of this phenomenon of cryptocurrency mining by burning natural gas. It's going to get worse."
And critics say the bitcoin industry's carbon emissions are already immense — larger than the total emissions of 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 past 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 New York State Assembly member Anna Kelles. She said the industry used to be lucrative for the little guy; now it's tougher to compete.
Berardelli asked, "So, mining bitcoin 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 single second of every single day."
She worries using power plants for industrial-scale mining will cause an escalation of emissions that may undermine New York's ambitious climate goals. So, she's proposing a moratorium on this type of operation.
"If they can work their way through all the regulations in New York State, which has some of the highest regulations in the country, it really sets a precedent," she said.
Together, Kelles and concerned residents, like Yvonne Taylor, are hoping to get ahead of this burgeoning bitcoin phenomenon before, they fear, it gets out of control.
"We are Anytown, USA," Taylor said, "and this could happen in any community."
"We have to nip this in the bud or else everything else we're doing to fight climate change will be undermined," she said.
Greenidge told CBS News they have purchased carbon credits to offset their CO2 emissions from the plant.
Their five-year air permit is now up for renewal. In an August letter to New York's Department of Environmental Conservation, Greenidge said that it is in compliance with New York's greenhouse gas emissions targets established by the new climate law.
New York DEC says Greenidge's application has not yet demonstrated compliance with those requirements.
DEC has not made a final determination on the permit. Public hearings are planned, and the DEC is accepting public comments on the renewal through October 22. It has also asked Greenidge to submit additional information.
As for cryptocurrency's carbon footprint, there may be a way to significantly reduce emissions. The second-largest cryptocurrency, ethereum, just announced it's changing the way they verify transactions. They say that will reduce emissions by over 99%.
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