Tuesday, June 25, 2024

Crypto-mining plant leaves New York facing a new legal battle for climate reasons

Crypto-mining plant

It’s the most recent argument over how crypto mining may interfere with New York’s climate goals.

Environmental organizations claim in a new complaint that converting a gas-fired power station into a cryptocurrency mine will violate the state’s climate goals and increase pollution in the area. 

They are urging New York State to investigate a crypto mining company’s purchase of the power plant.

On Friday, a lawsuit was launched by the Sierra Club and the Clean Air Coalition of Western New York to contest the sale’s clearance by the New York Public Service Commission (PSC).

Crypto-mining plant

According to state legislation, the commission must grant the go-ahead before a power plant’s ownership may be changed. The commission’s primary concern up to this point has been whether or not a transaction like this would raise power prices for customers or lead to a monopoly.

According to the latest complaint, a comprehensive climate law approved in 2019 requires the commission to start taking climate change and environmental injustice into account.

You cannot just disregard these extremely significant repercussions, according to the law.

According to Dror Ladin, senior attorney at Earthjustice, the nonprofit environmental law organization supporting the plaintiffs, “the law says you can’t just disregard these extremely catastrophic repercussions.”

“It will be detrimental for the climate and for the people in the neighborhood to run the plant 24 hours a day to mine cryptocurrency.”

Between Buffalo and Niagara Falls, in the little community of North Tonawanda, sits the Fortistar power plant. When there is a shortage of energy, Fortistar is typically operated as a so-called “peaker plant,” occasionally lighting up to satisfy the peak electrical demand.

Environmental Protection Agency data referenced in the complaint show that the facility has only been in operation 10 to 25 days a year since 2017.

Some locals are concerned about their possible new neighbor, Canadian crypto mining business Digihost since they anticipate that timetable to change substantially if they move in.

In April 2021, Digihost requested that the PSC approve the takeover of Fortistar. According to an environmental assessment form the firm submitted to North Tonawanda later that year, it intended to operate the facility “24/7” to power its cryptocurrency mining equipment.

Bitcoin mining by cryptocurrency corporations consumes more power in a year than in many small countries.

“Miners” use specialized hardware to solve challenging computational puzzles to validate new transactions on the Bitcoin blockchain and gain new tokens in return. Your chances of winning fresh tokens increase as your hardware and energy usage increase.

That results in a significant amount of pollution, especially for enterprises that rely on gas-fired power plants, like Fortistar. Some locals are concerned that Fortistar’s environmental impact may worsen if it begins operating around the clock.

In an affidavit that is included with the environmental groups’ case, a neighbor who lives approximately a quarter mile from the gas plant said, “My eldest kid has asthma, and I fear how the pollution may affect him.” I have chronic obstructive lung disease and am concerned more pollution will make it worse.

There are also climate targets for New York to take into account. By 2050, the state intends to reduce its greenhouse gas emissions by at least 85%.

The climate law it approved in 2019 requires state agencies to evaluate whether their choices might jeopardize those goals or unduly affect “disadvantaged populations” to attain that aim. 

Even while the state is still working on defining what constitutes a “disadvantaged” neighborhood, several census tracts close to Fortistar have already been discovered to have higher pollution tolerance levels than 90% of the state.

Nevertheless, Digihost’s request to buy the facility in September 2022 was accepted by New York’s Public Service Commission. Although many commentators express serious environmental worries.

The limited review conducted in this process does not cover these issues, the PSC stated in its ruling.

The Friday lawsuit is the first to demand that the PSC expand the scope of its decision-making by referencing the climate legislation of New York.

If the environmental organizations prevail, the commission would have to reconsider whether to approve Digihost’s proposed acquisition of the facility.

Digihost could find it difficult to persuade the state that its new cryptocurrency mine won’t jeopardize climate goals.

The state’s Department of Conservation refused air permits in a similar dispute involving the Greenidge crypto-mining power plant in New York because its activities “would be inconsistent with the statewide greenhouse gas emission limits established in the Climate Act.”

A two-year restriction on new permits for fossil fuel power facilities looking to mine Bitcoin was signed by Governor Kathy Hochul in November. That provides the state enough time to examine how widespread crypto mining will influence the environment.

Since Greenidge and Fortisar requested air permits before the law’s passage, they are both exempt from the ban.

While it disputes the state’s judgment on its air permit, Greenidge is currently operating normally. Environmentalists, however, are hopeful that they might be able to prevent a crypto mine at Fortistar from ever starting.

The PSC stated in an email that it doesn’t comment on ongoing litigation, while Digihost and Fortistar did not reply to The Verge’s request for comment.

Of course, the current crypto winter, which has reduced the profitability of Bitcoin mining, is still a problem for Digihost. The corporation, however, boasted of a 60% year-over-year rise in its Bitcoin output in 2022 in a press statement from January.

Additionally, according to the release, Digihost has already set up “mining infrastructure” in North Tonawanda and “expects the deal to conclude” in the first quarter of 2023.

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