The legislation stems from alarm over the prospect that Greenidge Generation’s proposed expansion of Bitcoin operations at its power plant in Dresden could be the harbinger of a wave of power plant conversions that would undermine the state’s ambitious climate action goals.
Senate Bill 6486 was introduced by state Sen. Kevin Parker (D-Brooklyn), chair of the Senate Committee on Energy and Telecommunications, and co-sponsored by Sen. Rachel May (D-Syracuse).
“The continued and expanded operation of cryptocurrency mining centers will greatly increase the amount of energy usage in the State of New York, and it is reasonable to believe the associated greenhouse gas emissions will irreparably harm compliance with the Climate Leadership and Community Protection Act in contravention of state law,” the bill says.
“Any generic environmental impact statement draft shall be subject to 120 days of public comment,” and require hearings in eight locations around the state, including the Finger Lakes.
For the measure to pass this year, the Legislature would need to act by June 10, the session’s scheduled closing date.
A separate bill with generally similar goals and provisions is expected to be introduced in the state Assembly by Assembly Member Anna Kelles (D-Ithaca) in the coming days.
“This is the ultimate example externalities being ignored,” Kelles told protesters who marched to the Greenidge plant April 17. “I will be pushing this at the state level.
Kelles told roughly 100 marchers she favored “a moratorium until we have an environmental impact statement that is complete…And not just on greenhouse gas emissions. We also have to talk about the impact on our waterways.”
The state Department of Environmental Conservation is reviewing Greenidge’s application to renew its air emission permits, which expire in September. The agency has remained on the sidelines as a local planning board waived an environmental impact statement for the proposed Bitcoin expansion.
Four years ago, the DEC allowed the long-mothballed plant to restart without an EIS after ruling that it would have no significant environmental impact. That triggered unsuccessful lawsuits from environmental groups concerned about air emissions, noise and the plant’s reliance on massive amounts of coolant water drawn from and discharged back to Seneca Lake.
Greenidge was originally permitted by the DEC and the state Public Service Commission to provide power to the electric grid. It began testing computer equipment to confirm and record Bitcoin transactions in 2018. The following spring it announced that it had launched a Bitcoin mining operation that used generated power that never reached the grid.
After gradually expanding the mining operation for two years, Greenidge announced in March plans to become a publicly-traded company on the NASDAQ exchange through a reverse merger with support.com. In touting that deal, Greenidge officials said the plant’s Bitcoin operations would need to boost power usage from 19 megawatts to 85 megawatts by the end of next year. They also said the company planned to adopt the same business model at other plants in the future, eventually drawing on at least 500 MW power by 2025.
Last month the Torrey Planning Board voted 4-1 to approve the construction of four new buildings to house more Bitcoin mining machines.
The chair, David Granzin, insisted that the board had no authority to consider the environmental impact of that expansion on plant operations on the grounds that the DEC had already granted the company its operating permits.
“We know that bitcoin in a big waste of energy, but we are bound by the law,” Granzin said in justifying his stance.
A recent report on Bitcoin and Greenidge in The New Yorker magazine called that a “debatable” interpretation of State Environmental Quality Review Act.
The Torrey Planning Board had voted to assume the “lead agency” role on the Greenidge expansion project, and the DEC deferred to its decision. Under SEQRA, the lead agency must accept ultimate responsibility for judging whether a project is environmentally harmful. It alone is empowered to decide whether or not to require a full environmental impact statement. Granzin voted with the board majority to waive an EIS.
Bitcoin mining has become increasingly profitable for Greenidge and its parent, Connecticut-based Atlas Holdings, as the market price of Bitcoin has soared in recent months, rising from $11,000 in October to more than $55,000 today.
Greenidge said its mining activities had captured 1,186 bitcoins during the year ended Feb. 28 at an average net cost of $2,869. Based on bitcoin’s average price during that 12-month period, Greenidge’s bitcoin profits may have passed $20 million.
The company’s proposed merger with support.com, which is scheduled to close by the end of September, triggered great initial excitement on the NASDAQ market. On the day of the announcement, the stock closed at $7.10, up from the $2.14 close the previous trading day.
(Atlas Holdings would control 92 percent of the merged company, while support.com shareholder would get 8 percent. At closing, support.com would become a subsidiary of Greenidge Generation Holdings LLC, the new NASDAQ-listed public company.)
The share price of support.com dropped to the $5 range in early April, then dove another 30 percent in the week following a report in NY Focus that highlighted Greenidge’s expansion plans and its collision course with New York State’s mandated climate goals.
The NY Focus article noted that EarthJustice and the Sierra club had warned Gov. Andrew Cuomo that the Greenidge business model could be copied by up to 30 other retired or antiquated fossil fuels plants across the state.
In an April 6 letter to Cuomo, the environmental groups said: “Additional scrutiny of the Greenidge air permit … is essential to prevent the floodgates from opening for other retiring power plants or peaker plants to follow Greenidge’s example,” the letter says. “Without it, the state would face grave challenges to meeting the CLCPA (Climate Leadership and Community Protection Act) requirements for reductions in New York’s carbon emissions of 40 percent by 2030 and 85 percent by 2050.”
Days after the letter, a Canadian bitcoin miner applied for state permits to acquire a power plant near Buffalo.
That prompted EarthJustice and the Sierra Club to send the DEC a followup letter, dated May 4, to warn that Greenidge was not an “outlier.” The letter said: “Fortistar North Tonowanda’s operations too will exploit the regulatory loophole that permits behind-the-meter generation to significantly increase greenhouse gas emissions in New York State.”
Meanwhile, other potential data center operators have been petitioning the state for allocations of low-cost (usually hydroelectric) power — the lifeblood of the cryptocurrency mining industry.
At the same time, representatives of bitcoin operations have been scouring the state for locations that already have allocations of low-cost energy, such as Watkins Glen.
Greenidge officials, including spokesman Michael McKeon, attorney Kevin McAuliffe and plant manager Dale Irwin, did not immediately respond to emails requesting comment on the Senate bill. This posting will be updated with their responses.