The state of New York has not been the most Bitcoin-friendly region, which is ironic since the area is synonymous with finance and financial innovation. One would think it’s natural that operating a Bitcoin-based business in New York would complement many firms based in the state, but regulators have a different view.
Many policymakers in New York do not fully understand Bitcoin and its potential benefits and risks. This has led to some misguided regulatory decisions, such as BitLicense, which has raised the barrier to starting and operating a Bitcoin-based business in the state. After taking aim at custody and exchange-based businesses, industry regulators in the state have gone after Bitcoin mining.
Bitcoin mining, the process of verifying and adding transactions to the blockchain, consumes significant energy. This has led to concerns about the environmental impact of Bitcoin mining, and New York has been a leader in regulating this activity.
In 2022, New York became the first state to enact a temporary ban on new Bitcoin mining permits at fossil fuel plants, a move aimed at addressing the environmental concerns over the energy-intensive activity. The legislation signed by Gov. Kathy Hochul imposes a two-year moratorium on Bitcoin mining companies seeking new permits to retrofit some of the state’s oldest fossil fuel plants. While also requires New York to study the industry’s impact on the state’s efforts to reduce its greenhouse gas emissions.
Despite the challenges, there are a number of Bitcoin businesses that operate in New York. These businesses are working to comply with the regulations and to educate policymakers about the potential benefits of Bitcoin, but it hasn’t been an easy road for these companies.
The curious case of Greenidge
Since the rollout of this new legislation, the Greenidge power plant has become the centre of fierce debate over Bitcoin mining in New York State and how the industry fits into the state’s climate goals.
Greenidge acquired a decommissioned coal-fired power plant in 2011 and reopened in 2017 after being purchased by Atlas Holdings; the company later converted to a natural gas plant which is seen as a cleaner energy source when compared to coal.
Upon operation, the plant then sold electricity to the grid but later decided to diversify this income by spinning up Bitcoin mining starting in 2019 and currently runs 17,000 rigs. Despite the company’s commitment to meeting climate goals, environmentalist opponents, along with Sen. Elizabeth Warren (D-MA), claim that their efforts are not enough; the environmental footprint of Bitcoin mining outweighs any justification for its existence, especially when it uses fossil fuels directly.
The moral argument against Bitcoin mining
New evidence has emerged showing that the moral arguments used to justify New York’s controversial ban on Bitcoin mining may have been based on fraudulent claims. Critics of Bitcoin mining have long argued that it revives dormant fossil fuel power plants, damaging the environment.
However, a closer examination of Greenidge Generation, the company cited to support the ban, paints a very different picture. Greenidge Generation acquired an inactive coal-fired power plant in 2014 and invested heavily, including a significant $65 million, to permanently transition it to natural gas operations before it was brought back online.
Greenidge breathes life into abandoned infrastructure
In 2017, Greenidge restarted the plant as a merchant power provider, supplying energy to the grid under newly issued permits, with no Bitcoin mining occurring at that time. It was only in 2020, as confirmed by their press release that Greenidge announced the addition of a data center for digital currencies to its power generation site in Upstate New York.
With a capacity of 106MW, this facility had over 14 MW already in operation using almost 7,000 units of the latest-generation mining hardware. Dale Irwin, CEO of Greenidge, emphasized the company’s commitment to running assets reliably and their excitement about the growth of the project. Over the next two years, the mining operation slowly expanded.
But throughout this entire period and to the present day, Greenidge’s power plant has been obligated by contract to provide electricity to the local energy market on a continuous basis. In fact, public records show that in 2022 Greenidge sent more power to the grid than when it only operated as a power plant without bitcoin mining. This clearly contradicts claims that Greenidge revived the plant for the sole purpose of mining Bitcoin and pulling extra power off the grid to do so. An examination of Greenidge’s SEC filings, which should be reviewed in detail, will likely tell the full story of how the operation evolved over time.
It began as a natural gas plant focused on grid supply in 2017, with the Bitcoin mining operation introduced later. With this context, it appears the moral argument used to justify New York’s ban was based on misinformation rather than facts. No fossil fuel plants have actually been brought back online predominantly to mine Bitcoin. Greenidge is the only operation ever cited by ban supporters, yet its real history contradicts the rationale for the policy. Recent evidence suggests that Bitcoin can have a positive impact on the environment, challenging many of the prevailing narratives.
Hard to play by the rules when rules are selectively enforced
It’s crucial that policies, especially those as impactful as bans, are based on accurate and comprehensive data. The evidence shows that certain criticisms of Bitcoin mining are more rooted in misconceptions than reality.
New York residents and policymakers deserve transparency and well-informed decisions. As the discourse around Bitcoin continues, it’s essential that it remains grounded in facts and genuine understanding rather than being swayed by misleading narratives.
Despite the pushback from policymakers, Greenidge has stated they are open to additional steps to meet the requirements the DEC has laid out for its permit approvals, which will take time to iron out.
While debates continue around the states’ arbitrary climate goals, the on-the-ground reality leaves many with an uncertain future. Energy prices impact the cost of living for everyone, and a reduction in energy supply only means more people bidding for less available resources. In addition, taking the energy supply offline can strain the grid and affect businesses that leverage these energy sources.
Closer to home, those at Greenige face an uncertain future with jobs hanging in the balance as the natural gas-fired power plant connected to a Bitcoin mine in Dresden, New York, continues to fight to for renewed permits from the state.
Do your own research.
If you want to learn more about Bitcoin mining bans, use this article as a jumping-off point and don’t trust what we say as the final say. Take the time to research, check out their official resources below or review other articles and videos tackling the topic.
- On The Brink – Jeff Kirt and Ted Rogers on the Story Behind the Greenidge Plant
- Vice – A Fossil Fuel Power Plant That Mines Bitcoin Is Fighting to Stay Open
- sec.gov – S1 – Greenidge
About the author
Muju Naeem brings two decades of experience in human rights and democracy work. He currently authors “Unintuitive Discourse – Literature for Humanist Activism.”
Passionately driven, Muju aims to mainstream political humanism and fervently advocates for the separation of money and state through Bitcoin adoption.