Bitcoin Miners Are Purchasing Old Power Plants. New Yorkers Aren’t Happy

Mining bitcoins can be a highly profitable venture. Still, the increasing difficulty of adding new blocks, along with the principles of economies of scale, means that only mining farms with access to large amounts of inexpensive energy can make a profit.

What exactly are mining farms? They’re large data centers filled with ASICs, which are specialized computers designed for solving cryptographic problems. Their primary task is to find a hash (the output of a mathematical function called “SHA-256”) that enables a valid block to be added to the blockchain.

This process organizes and propagates secure transactions on the bitcoin blockchain. It offers a substantial reward. Every time a miner successfully adds a block to the chain (approximately every 10 minutes), they receive 3,125 new bitcoins, equivalent to about $101,606. However, mining has a huge disadvantage: high energy costs.

This is where the price of electricity becomes crucial. Upstate New York is particularly attractive for mining operations because of its abundant hydroelectric power. However, hydroelectric power plants aren’t the main focus for mining farms.

Gas-fired power plants. In New York, the energy demands of bitcoin miners have taken a troubling turn. Companies are now acquiring older or underutilized power plants, primarily those fueled by natural gas, to support their round-the-clock operations.

A notable example is Greenidge Generation’s former coal plant, located next to Seneca Lake in Upstate New York. In 2017, this plant was converted to a combined-cycle power plant and operated only during times of high energy demand. However, in 2020, the company installed a bitcoin mining facility adjacent to the plant, drawing power directly from it.

A new trend. In 2018, Greenidge Generation supplied 203,918 MWh to the power grid. By 2020, with bitcoin mining as its primary focus, it had significantly increased its gas consumption. The plant generated 215,588 MWh for the grid and an additional 132,215 MWh specifically for bitcoin mining.

According to Inside Climate News, emissions from the plant have increased sixfold since the onset of bitcoin mining activities. This development has created a symbiotic relationship between gas-fired power plants and cryptocurrency mining. Greenidge Generation has become a proof of concept for the potential revival of 49 other similar plants across New York.

More from Xataka On

A Group of North Korean Hackers Pulled Off the Biggest Crypto Robbery in History. This Is How They Did It

Legal uncertainty. New York isn’t particularly lenient regarding environmental policy. The Department of Environmental Conservation denied Greenidge’s permit renewal in 2022 for violating the state’s climate law, which mandates reductions in emissions.

Despite this denial, Greenidge is allowed to continue operating while it appeals the decision. State law permits operation during the administrative process.

Frustration. Another contentious case involves Canadian company DigiPower X. It acquired the North Tonawanda combined cycle power plant near Niagara Falls from Fortistar to power its own bitcoin mining operation.

Neighbors have reported a constant noise emanating from the large fans cooling the data center. These complaints led to a lawsuit against the company, resulting in a two-year moratorium and formal investigations into the noise and the facility’s water consumption, which is estimated at 500,000 gallons a day for cooling the servers. While this isn’t drinking water, it places strain on the local wastewater infrastructure.

In November 2024, the New York Supreme Court ordered the Public Service Commission to reassess the sale of Fortistar for a possible violation of state climate law. However, the plant is permitted to continue its operations during the legal proceedings.

The battle continues. Under the Trump administration, changes at the federal level have favored miners. The new administration has lifted restrictions on fossil fuel usage and plans to implement a more relaxed regulatory framework for cryptocurrencies.

Meanwhile, despite ongoing legal battles, the Greenidge and North Tonawanda mines continue to operate, along with their associated power plants. According to the Energy Information Administration, cryptocurrency mining accounts for up to 2.3% of the U.S.’ total electricity consumption.

Image | Kanchanara

Related | Texas Wants to Force Solar Companies to Buy Energy From Coal Plants—at Night