New York officials denied required air permit renewals Thursday to a bitcoin-mining power plant on the grounds that it was a threat to the state's climate goals.
The permitting decision was another example of New York putting the brakes on a cryptocurrency bonanza that has alarmed environmentalists. It also comes at a time when cryptocurrency prices have plunged, wiping out fortunes, fuelling skepticism and sparking calls for tighter scrutiny.
The state's permitting decision involved Greenidge Generation, an old coal-fired plant by the shore of Seneca Lake which had once been shut down, but was converted from coal to natural gas several years ago and began bitcoin mining in earnest in 2020.
A majority of the electricity produced by the plant is now used to run more than 15,000 computer servers for bitcoin mining, which guzzles massive amounts of electricity.
In rejecting the renewals, the state Department of Environmental Conservation said the plant's conversion to a cryptocurrency mining operation meant it was creating a significant new demand for energy "for a wholly new purpose unrelated to its original permit.”
“Instead of helping to meet the current electricity needs of the state as originally described, the facility is operating primarily to meet its own significant new energy load," the agency said in its letter to the company.
The company said it would continue operating under its current permit while it challenged the decision. It said there was “no credible legal basis" for the denial.
“It is absurd for anyone to look at these facts and rationally claim that renewing this specific permit — for a facility that makes up a small fraction of the state's electricity generation capacity — would impede New York's long term climate goals. It simply would not," the company said.
Climate activists who see Greenidge as a test case had asked Gov. Kathy Hochul's administration to deny renewal of the plant's air quality permit and to block similar projects.
The decision comes as Hochul is deciding whether to sign into law a two-year moratorium on new and renewed air permits for fossil fuel power plants used for proof-of-work mining.
Greenidge is not affected by the first-of-its-kind moratorium measure, which covers new applications.
New York has attracted a number of companies that need inexpensive energy to run the huge computer arrays needed for energy-intensive “proof-of-work” cryptocurrency mining — a term for the computational process that records and secures transactions in bitcoin and similar forms of digital money.
Greenidge has said that even if the plant ran at full capacity, its potential emissions equate to 0.23% of the state's greenhouse gas emissions reduction target for 2030. The company argued the plant is 100% carbon neutral, thanks to the purchase of carbon offsets, such as forestry programs and projects that capture methane from landfills.
Environmentalists were pleased with the denial.
“Governor Hochul and the DEC stood with science and the people, and sent a message to outside speculators: New York's former fossil fuel-burning plants are not yours to re-open as gas-guzzling Bitcoin mining cancers on our communities,” said Yvonne Taylor, vice president of the advocacy organization Seneca Lake Guardian.