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In the face of social interests and environmental choices, can New York State open a precedent for the world in terms of policy?
Original title: “Environment vs. Benefits, where should the encryption mines in New York State go?” 》
Written by: Scott Chipolina
Compilation: Fenbushi Capital
Xinjiang, Gansu, and Inner Mongolia have announced the prohibition of Bitcoin mining. After many miners are preparing to move overseas, there are also many voices about Bitcoin mining in some foreign areas. From an economic point of view, Bitcoin mining can bring good news to economically stagnant areas, promote employment and increase taxes. From the perspective of environmental protection, the carbon emissions of Bitcoin mining exceed the standard, which is a burden on the environment.
And the United States has always been a country where multiple forces are playing games—governments (state governments, federal governments), enterprises, civil organizations, and so on. At present, Bitcoin mining in New York State is being protested by environmentalists, and the confrontation between all parties is in a stalemate. The phenomenon in New York State seems to be a microcosm of the current global mining industry.
The Finger Lake area is one of the most beautiful areas in New York State, but its natural beauty hides the pain of this area being hit hard by the industrial recession. Now, some people are introducing a new type of industry-Bitcoin mining. Bitcoin mining provides people with opportunities to create digital wealth, but this move has also aroused strong opposition from environmentalists.
Five Finger Lakes, U.S.
Greenidge Generation is at the center of this struggle. The company was founded in 1937 as a coal-fired power plant, but has recently switched to using cleaner natural gas to mine bitcoin, and says it complies with all environmental regulations in New York State. Environmentalists claim that Greenidge’s equipment not only harms the global environment, but may also pose a fatal blow to the climate and environment of New York State.
the effect on the environment
This conflict in New York State has aroused the attention of the global media. Although Greenidge currently only mines 4 bitcoins a day, it has become a target of public criticism. Public opinion claims that the current environment advocates energy conservation and emission reduction, and Bitcoin is just an unnecessary waste of energy.
Greenidge Generation describes itself as a Bitcoin mining facility that uses natural gas to generate electricity around the clock. According to the US Energy Information Administration, natural gas emits about 117 pounds of carbon dioxide per million British thermal units (MMBtu), which is more than 40% lower than the 200 million British thermal units (MMBtu) of coal.
But the carbon emissions of natural gas still far exceed those of renewable energy sources such as solar or wind energy. Environmentalists are furious about Greenidge Generation’s use of natural gas to mine Bitcoin.
“It’s not friendly to the environment,” Mandy DeRoche, the deputy chief attorney for Earth Justice, told Decrypt. He added, “I don’t think that decommissioned power plants burn natural gas all day long (except for a few days in summer or winter) to meet greenhouse gas emission reduction targets anywhere.”
Some New York State lawmakers are as worried as DeRoche. Earlier this month, State Senator Kevin Parker introduced a bill on the agency’s Environmental Protection Committee. If the bill is approved, Bitcoin mining centers will have to undergo a comprehensive environmental review before they can operate. This process may take up to 3 years .
The bill reads: “The continued expansion of cryptocurrency mining centers will greatly increase the energy use in New York State.” The bill also states that mining activities may cause New York State to fail to meet the greenhouse gas emission targets required by the law. This bill is not only about Greenidge mining, it also threatens the continued emergence of Bitcoin mining operations in the state. If this bill is passed, it may become a model for other states or countries in the United States that curb encryption businesses. At the same time, due to the environmental impact of mining in China, the government of Inner Mongolia in China has taken severe measures against mining.
When Greenidge Generation refuted this measure, it stated that it had obtained special permission to operate in Dresde, New York. The permit appears in the form of a Title V permit, forcing monitoring and control facilities to detect annual greenhouse gas emissions. After Greenidge received the last Title V permit in 2016, it hopes to be renewed in September this year.
On March 25, Greenidge submitted a series of documents to the New York Department of Environmental Protection to apply for a permit again. There is a letter in the package that stipulates the legal maximum emissions that Greenidge’s mining equipment can generate under the current Title V permit.
Greenidge Generation’s data center in Dresden, New York
The company’s plant in Dresden emits up to 641,000 tons of carbon dioxide per year. Decrypt has asked the company to provide actual emissions, but so far the company has not given this data. According to the calculation of the environmental protection agency’s carbon emissions, the company’s maximum statutory emissions need to burn about 708 million pounds of coal, which is relative to the annual average electricity consumption of 116,000 households or 1.6 billion miles of passenger car driving.
The environmental impact of the Greenidge factory can also be assessed based on Bitcoin’s overall carbon footprint. Decrypt previously reported that Bitcoin’s non-renewable energy (including the natural gas used by Greenidge) generates approximately 80 terawatts of electricity per year. If calculated according to the highest annual carbon dioxide emissions of Greenidge, the carbon emissions generated by Bitcoin miners accounted for 1% of the total carbon emissions.
In addition to environmental factors, Earth Justice’s DeRoche also worried that Greenidge’s carbon emission permit would be updated without any real review. “General business licenses will be renewed normally, but factories like Greenidge are actually left unattended.”
In response, the Earth Justice organization sent a letter to the New York Environmental Regulatory Agency and warned that the state’s abandoned power plants have started the growing Bitcoin mining business, and Greenidge’s activities are only part of it. For example, the blockchain company Digihose Technology is planning to develop the Fortistar North Tonawanda power plant for Bitcoin mining operations.
Environmentalists worry that the current trend represents the beginning of a new business model that prevents New York State from meeting its expected energy conservation and emission reduction targets. These climate indicators are incorporated into state laws and regulations, which require that 70% of the state’s electricity be generated from clean energy by 2030, and this proportion will reach 100% by 2040.
“If Greenidge expands, or other power plants like Greenidge switch to Bitcoin mining, then I don’t know how to achieve the carbon emission target,” DeRoche said. “They should be eliminated, and elimination is justified. .”
Feedback from Greenidge
In a conversation with Decrypt, Dale Irwin, CEO of Greenidge Generation, refuted the company’s criticism and the criticism of the Bitcoin mining industry. Irwin stated that the restart of Greenidge is not just for Bitcoin mining. However, as early as 2019, Greenidge conducted a pilot project for Bitcoin mining.
He also said that Greenidge’s business model is not for other decommissioned power plants to follow suit. Irwin also pointed out that Greenidge is helping the upstate area of New York develop the economy. “Currently we have about 35 employees. When the power plant expands, this number will increase to 40 or even 50,” he added. “We must realize that the average salary of each employee is equal to the average salary of the surrounding community. Twice, this is very important.”
According to economic analysis based on the 2020 Census Bureau, the average salary in Dresden is $38,214 per year . At the same time, Irwin said that the average salary at the Greenidge factory is $77,000 .
Whether or not Greenidge sets a precedent for other potential miners in the state. Irwin told Decrypt that he plans to remove natural gas power from the equipment anyway in the future. Part of the reason for this plan is the imminent legal requirement that by 2030 70% of New York State’s electricity must be provided by renewable energy sources . When asked if he promised to stop using natural gas, Irwin said: “We have made a promise, and in the end, we will have no choice.”
Where is Bitcoin mining in New York State?
Greenidge’s mining business is a controversial business, but it is also a profitable business. Today, this institution mines approximately 3.8 to 4 bitcoins per day. Based on recent price calculations, it now earns approximately US$150,000 per day , which is a significant increase from the US$50,000 figure it disclosed to the media in March 2020.
Irwin believes that the company not only provides valuable services to surrounding areas, but also provides services to individuals all over the world who use Bitcoin. “Bitcoin is useful in Argentina. Argentina’s national currency has an inflation rate of 5000%. Bitcoin is also useful in Nigeria, where 32% of the population uses Bitcoin. There are 100 million people in the world using Bitcoin. .”
This argument does not convince environmentalists like DeRoche, who believe that the abstract benefits advocated by Greenidge cannot compensate for the harm caused by greenhouse gases to the environment.
This debate is about to reach a climax. The Senate’s proposal to suspend mining for three years seems to be gaining momentum, but the possibility of its passage is unclear. Although New York State Governor Andrew Cuomo has not yet made a statement, he has previously described ignoring climate change as a major negligence, suggesting that he is willing to sign the agreement. (Chain notes, the bill has not passed the New York State Legislative Council vote )
However, some people are trying to kill the bill. “Various groups in New York are very strongly opposed to this bill,” Irwin said. He specifically mentioned the International Brotherhood of Electrotechnical (IBEW). “These organizations believe that it would be a mistake to officially suspend some industries that comply with environmental laws and generate huge benefits.”
At the same time, New York State and Greenidge are also participants in the geopolitical game. In other words, China still accounts for about two-thirds of the global bitcoin mining industry, which has led some people to warn that the United States is ceding control of a key strategic asset to its biggest competitor.
Bitcoin mining in the United States has recently increased, from 4% in September 2019 to nearly 8% of the global share . At the same time, in March of this year, the British-based Argo Blockchain Company purchased land in Texas and started a Bitcoin mining business, while the American Riot Blockchain Company is also in a large-scale company in the state. More than $600 million has been invested on Bitcoin mining sites. These investments can be turned into political capital to help American miners avoid wider regulation.
As for Greenidge, Irwin claims that Bitcoin mining will continue to exist. If Bitcoin mining flourishes in New York State, we will all have a better life, where the regulations are clearer than in China. Many mining operations in China are conducted with coal, and there are no clear rules. “It is good to have known, measurable, and communicable environmental regulations, after all, better than vague rules.”