In 2014, Greenidge Generation, a company engaged in power generation, acquired the Lockwood Hills coal-fired power plant located on Seneca Lake, one of the Finger Lakes in upstate New York, and converted it into a type that uses natural gas. And today, Greenidge is using that plant to mine Bitcoin.
As the BBC reports, the converted facility now houses a turbine on one side to generate electricity that is then used to power hundreds of computers working on Bitcoin transactions.
That said, the company doesn't just mine Bitcoin. They operate off of a hybrid model, where some energy goes to the grid and some energy is used for mining. The amount of power that's used to mine Bitcoin and the amount that's sold to the grid is determined by whichever is more profitable on any given day. As Tim Rainey, the company's CFO, explained to Forbes, electric power production costs fluctuate, and these fluctuations ultimately influence the decision to either mine crypto or sell power to the grid.
It is a novel formula, and Greenidge may just be on the winning side of history when it comes to this model.
Cryptocurrencies such as Bitcoin are going through a defining moment in their relatively short lives. Though they have been neglected and dismissed by countries and corporations for long periods of time, it seems like they are finally having their moment, with several countries saying they will finally allow it as legal tender.
But the shift in approach is not without detractors.
Environmentalists have pointed out that mining cryptocurrencies is energy-intensive, in some cases using the same amoung of power as entire countries. But that's not all. Globally, electricity is still generated using fossil fuels, such as coal and natural gas, and this leads to carbon emissions.
Where does Greenridge stand on all this? The company claims that it has reduced emissions from the site by 75 percent when compared to the coal-fired plant. That may be an improvement. However, although the plant uses natural gas now and not coal, it still releases a lot CO2 emissions. As a result, local residents continue to express significant concerns about pollution and other issues associated with the operation, and so do a number of environmentalists and environmental organizations.
In fact, there is a rather well-organized opposition in the entire region to this plant and to its expansion. Citizens have staged marches and, in a Jan. 25 letter to Gov. Andrew Cuomo, more than 100 businesses expressed their opposition. The letter stated, in part,
"With its transition to natural gas, the facility operates at less than half the efficiency of more modern natural gas power plants, and its expansion proposal means an increase from its 6% in 2019 to 100%, 24/7 usage, consuming enough power to fuel more than 90,000 homes....This facility will emit more greenhouse gases than it has in any of the past 15 years....It is reckless to allow a 70-year-old fossil fuel-burning facility (Greenidge) to power a Bitcoin mining operation generating bitcoin hash rate....In essence, the Public Service Commission and the Finger Lakes community have been misled so that Atlas Holdings LLC could secure a Certificate for Public Convenience and Necessity and Lightened Regulation and then turn around and use this facility for their own personal gain."
In April, legal campaign Earthjustice and the Sierra Club also wrote a letter to the New York State Department of Environmental Conservation opposing the expansion of the Greenidge facility, partially on climate grounds.
Nevertheless, the planning board, which consists of five people, voted to allow Greenidge to operate.
The company, for its part, went ahead and voluntarily purchased carbon offsets to make its operations carbon-neutral in May this year, claiming to be the first Bitcoin mining operation in the U.S. to do so. Now, the company says it is doing even more, planning to invest a portion of the profits from its mining operations into renewable energy projects in New York.
Additionally, the company is working with the New York State Department of Environmental Conservation to permanently close a coal-ash landfill on the site and construct a 5 MW solar power plant on the 143-acre site.
"Bitcoin mining at Greenidge is already a model for the industry," Jeff Kirt, CEO of Greenidge Generation Holdings Inc, said in a statement. "We are advancing this emerging financial platform for people across the world in a manner that fully protects our environment and drives economic growth across Upstate New York."
According to its website, the company currently operates only out of one location in Upstate New York and has plans to expand to South Carolina, where it will mine Bitcoin using zero-carbon sources.
But some local residents remain unconvinced.
Note: This article has been updated. A previous version erroneously stated that the plant is only used to mine Bitcoin. This has been updated and corrected. Statements from local residents were also added.