Crypto foes gird to stop mines from ‘spreading like cancer’

By Niina H. Farah | 05/02/2023 06:45 AM EDT

With few crypto laws on the books, mining opponents have had to find creative ways to stop the energy-hungry facilities from taking root in their communities.

Photo collage with coins with bitcoin symbol and a hand with a gavel.

POLITICO illustration by Claudine Hellmuth/Photos by iStock

In the wake of a national surge in crypto mining, local activists are searching for ways to fight the energy-intensive industry’s rapid growth — and calling on Congress for backup.

Crypto mines — banks of computers that run to obtain digital currency — can operate as much as 24 hours per day, seven days a week and, depending on their energy source, can spew significant levels of planet-warming gases.

After China cracked down on crypto mining within its borders a year and a half ago, the industry has become a growing presence in communities with cheap electricity from hydropower — and also from more carbon-intensive sources like natural gas and coal.


“These miners are moving to the United States and spreading like cancer across the country,” said Yvonne Taylor, one of the founders of the National Coalition Against Cryptomining, a new advocacy group uniting activists from Georgia to Washington state.

She added: “We had to do something on a national level.”

In 2020, before China’s crackdown on crypto mining, the United States accounted for just 3.5 percent of global mining of bitcoin, the leading type of cryptocurrency.

By 2022, that figure had jumped to 38 percent, and the United States is now home to a third of global crypto mining assets, according to a report from the White House Office of Science and Technology Policy (OSTP).

The crypto boom has led to a tripling of energy usage since 2021 — matching the amount of power needed to turn on the lights in every home in the United States.

Crypto mining uses so much energy because banks of small computers are competing to solve complex math puzzles to win digital currency. The more computers running, the better the odds of making a profit.

That energy consumption is still under 2 percent of total U.S. electricity use, but the White House report warned that crypto’s boom-and-bust cycles could continue to strain the grid just as the nation is aiming to slash emissions from the power sector.

For climate activists who find themselves living near a crypto mine, the lack of U.S. law governing the industry is a critical challenge. Communities cannot get a clear picture of where the facilities are located, and estimates of the sites’ cumulative climate impact is uncertain.

In some places, crypto mining opponents warn that the facilities are bringing fossil fuel power plants back online or delaying their retirement. In other cases, critics say the facilities are draining so much power from renewable sources like hydroelectric dams that residents are not able to take advantage of those sources and are instead getting energy derived from fossil fuels.

The disruptions reach beyond climate impacts: People living near the facilities say the mines also require noisy fans and massive amounts of water to keep their servers cool.

In the absence of federal crypto mining laws, people living near the sites are taking a multipronged approach to fighting the facilities. Their options are driven by local and state regulation and range from changing or enforcing zoning codes to hiking energy costs for the mines.

While opponents aren’t immediately removing the facilities, they are laying the groundwork for future legal challenges against crypto mining.

Crypto mining pollution has drawn the attention of some lawmakers on Capitol Hill. Sen. Ed Markey, a Massachusetts Democrat, reintroduced legislation in February aimed at collecting nationwide data on the industry’s environmental impacts.

Passage of the “Crypto Asset Environmental Transparency Act” would allow the federal government to collect data necessary for it to potentially establish efficiency standards for the industry, like those that currently exist for everything from air conditioners to automobiles. Failure to comply with efficiency standards, in turn, could provide grounds for litigation from crypto mining opponents.

“This is an emergency, an urgent issue, and Congress needs to be proactive,” Markey said in a recent congressional hearing.

Federal action is crucial, Taylor said.

“This cannot be a town-by-town or even a state-by-state fight,” she said. “These miners are just going to pick up their machines and move them to a more friendly state. And that doesn’t solve our climate problem.”

Harnessing state climate power

As Congress mulls federal action, crypto opponents in environmentally conscious states are leveraging new climate tools in an effort to push out mining operations.

New York environmentalists, for example, are invoking the state’s 2019 Climate Leadership and Community Protection Act in their effort to block a crypto mine in the Finger Lakes region.

Greenidge Generation Holdings Inc.’s Torrey, N.Y., facility is built on the site of a former coal plant on the shores of Seneca Lake that the company converted in 2017 to burn natural gas.

“To resurrect old power plants and suck up a lot of energy and make us more reliant on fossil fuels in the middle of this [climate] crisis is literally insane,” said Taylor, whose New York-based group, Seneca Lake Guardian, is fighting the Greenidge facility.

New York passed a moratorium last year blocking any new crypto mines while the state evaluates their environmental effects, but the ban did not apply to Greenidge and another facility that were already permitted to operate in the state.

In June 2022, New York’s Department of Environmental Conservation denied Greenidge’s application to renew the air permit for its 107-megawatt capacity plant, citing the state climate law, which requires 40 percent overall emissions cuts by 2030. The company is appealing the decision before an administrative law judge, and the mine is continuing to operate in the meantime.

In response to the permit denial, Greenidge said it would slash emissions by 40 percent by the end of 2025 and would become a zero-carbon-emitting facility by 2035.

“We can absolutely meet important climate goals, while generating new careers and harnessing all the potential of this industry, and our New York operation shows the path,” Greenidge President Dale Irwin said in a statement.

Mandy DeRoche, deputy managing attorney at Earthjustice, said in an email that Greenidge’s proposal for emissions reductions is “speculative and non-binding” and “meaningless in terms of actual air pollution.” She noted that even if the company followed through on the plan, it would still be allowed to emit nearly 350,000 tons of carbon dioxide each year. That’s equivalent to the emissions from the electricity used to power about 67,000 homes for one year, according to EPA.

Greenidge’s permit denial came after environmental challengers made a number of unsuccessful attempts to get a court to block the project’s water permits and overturn the Torrey Planning Board’s 2020 approval for the facility. Despite the earlier losses, environmental groups are continuing to fight the project in federal court, this time over an alleged violation of the Clean Water Act.

Seneca Lake Guardian and other groups allege in a lawsuit filed in January that the company failed to properly submit a renewal application to state officials for a water discharge permit.

Greenidge maintains the issue belongs in state court, which has already ruled in its favor.

The company told a federal judge that the challengers’ “attempts to distort” New York’s requirements and discredit state officials’ determination of the project are “inapt.”

Calls for stronger state laws

On the other side of the country, activists are turning to state lawmakers for help to drive up the costs of crypto mining — and make their communities less attractive hosts for the energy-hungry facilities.

Benjamin Richards, a 47-year-old retired Army officer, said residents in Pend Oreille County in northeastern Washington want to see a crypto mine owned by Chinese technology company Bitmain Technologies Ltd. and investment firm Allrise Capital Inc. leave their quiet community.

Bitmain purchased the bankrupt Ponderay Newsprint mill in Usk, Wash., last March, inheriting its water use and electricity permits for the 100-MW crypto mining facility.

Richards said the mine requires three times more power than all the county’s residents and other businesses combined. Although the county receives hydropower from the nearby Boundary Dam, Richards contested developers’ claims that the crypto mine is powered by renewable energy.

The crypto facility’s high energy demand means the public utility district has to purchase additional power each month from the Mid Columbia hub, a regional wholesale electricity market, he said in an email.

Neither Bitmain nor Allrise could be reached for comment about the Usk crypto mine.

After failing to dissuade county officials from approving the Bitmain project, Richards and other activists are hoping Washington legislators will pass H.B. 1416, which would amend the state’s 2019 Clean Energy Transformation Act. The law requires utilities to ramp up clean energy purchases until they achieve the law’s target of 100 percent zero-emission energy by 2045.

But the law does not apply to customer-owned utilities, like the Pend Oreille County Public Utility District, which provide half the electricity sold in Washington state. This has allowed industrial customers like the Bitmain crypto mine to purchase non-compliant power from out of state, said Richards.

H.B. 1416 stipulates that non-residential users of customer-owned utilities — like crypto mines — also meet the state’s clean electricity purchasing requirements. The bill passed the state House and Senate and has been delivered to the governor’s desk to be signed into law.

The legislation comes after at least two public utility districts took their own steps to curb costs from crypto mining.

“The bill would require the bitcoin mining facility to purchase source-specified power on the market, which would increase their power costs going forward,” Richards said.

Glenn Blackmon, a manager of the energy policy office at the Washington Department of Commerce, said the need for H.B. 1416 became evident after the state’s clean energy law went into effect.

“We’ve seen in the last couple of years an increasing interest in large new uses of electricity for things like hydrogen production, data centers [and] crypto mining operations,” he said, “and we realized that if any of those were located in areas served by consumer-owned utilities, the clean energy law wouldn’t apply to them.”

States embracing crypto mining

In states that have thrown their support behind crypto mining, opponents face even more of an uphill battle.

Missouri and Mississippi are passing “right to mine” bills actively encouraging development of the sector. Kentucky has also passed incentives for crypto mining.

The fight is particularly challenging in Texas, where crypto mining accounts for 3 percent of local peak electricity demand, according to the White House OSTP report. Over the next decade, that could become a third of existing peak power demand in the state, the report said, posing challenges to electricity reliability.

Gov. Greg Abbott (R) has called for the Lone Star State to become a global leader in the industry, and it could soon be home to a facility that has been touted as one of the top digital cryptocurrency mining operations in the world.

Not all Texans are ready to roll out welcome mats.

“They don’t even produce anything,” said Jackie Sawicky, founder of Concerned Citizens of Navarro County and a member of the National Coalition Against Cryptomining. “They’re a digital lottery guessing game that is being heavily subsidized by taxpayers and energy consumers.”

Sawicky’s community, located in Navarro County in the Dallas-Fort Worth region, is the planned site for the $333 million Expansion project developed by Colorado-based bitcoin mining company Riot Platforms Inc. The facility will come online later this year with 400 MW of capacity, with another 600 MW planned for the second phase of construction.

The operation would be powered by the Navarro switch, a high-voltage transmission line near the Corsicana, Texas, project site.

Sawicky said she and other residents are concerned about how the crypto mine is being incentivized and what that will mean for their energy bills. Securities and Exchange Commission filings from 2021, for example, show that a 700-MW facility run by Riot in Rockdale, Texas, outside of Austin has a power agreement that has locked in low-cost electricity rates until April 2030.

While Sawicky has repeatedly reached out to local officials and requested dozens of documents related to the Corsicana facility, she said she doesn’t know how she would challenge the crypto mine in court.

The broader problem, from environmentalists’ perspective, is the way cryptocurrency is designed based on a decentralized system of transactions, called a blockchain. Building new blocks of that chain is what requires all the energy-intensive problem solving.

“We will never get off of fossil fuels as long as the bitcoin blockchain exists,” Sawicky said.

Even if companies are using renewable energy sources, that zero-emitting power “could be used to make our costs lower,” she said.

Riot declined to discuss the specific tax incentives it received for developing the Corsicana mine but said in an emailed statement that agreements like those in place for its Rockdale facility don’t exempt the company from paying taxes and are important for attracting jobs to rural areas.

“Based on our projects, we expect the development of the Corsicana Facility to directly lead to the creation of at least 250 full-time, high-wage jobs and will position Riot as one of the largest employers — and taxpayers — in Corsicana,” the company said.

Riot said its new project would drive “significant positive economic benefits” to Navarro County, just as the Rockdale facility did in its community.

The company also said it is working with the Electric Reliability Council of Texas to prevent overloading the grid, and the Rockdale facility is providing a market for wind and solar energy during off-peak times that “would otherwise be wasted.”

When asked about community members’ concerns about emissions resulting from its mining operations, Riot said it has “no ability to control” the energy mix in the grid.

“Further, the company is constantly exploring alternative energy sources, including wind and solar self-generation, as its long-term plans focus on reducing cost of power,” Riot said, “and alternative energy generation is projected to be more cost effective than fossil fuel generation in the long-term.”

Push for new federal law

Frustrated with the patchwork of regulatory responses to crypto mining across the country, community activists in recent months have turned up the volume on their calls for Congress to step in and craft environmental standards that would apply to the sector nationwide.

At least some federal lawmakers are paying attention.

The legislation reintroduced in February by Markey and Rep. Jared Huffman, a California Democrat, would bolster EPA oversight of crypto mining.

If passed, the bill would require crypto miners to disclose their emissions to EPA’s Greenhouse Gas Reporting Program, establishing a federal database of the impact of the facilities. The White House OSTP report estimates that crypto mining contributes to less than 1 percent of total U.S. emissions but warns that the assessment is uncertain due to rapid fluctuations in the industry’s energy consumption.

The legislation could also address uncertainty about the whereabouts of crypto mines. Developers aren’t always clear about what they are trying to build in their permitting applications, said activists from several states.

Rob Altenburg, senior director for energy and climate at PennFuture, told lawmakers during a March congressional hearing that some companies have been plugging crypto mines directly into natural gas wellheads without obtaining permits.

“We’ve asked regulators where the crypto mines are, and they can’t really say with any degree of certainty,” he said.

In some instances, developers have presented the proposed facilities as data or science centers, and it wasn’t until after they were approved that residents became aware that they were, in fact, more energy-thirsty crypto mines, Earthjustice’s DeRoche said.

“Where communities have found success is when they are able to quickly galvanize together and get a lot of community involvement right away, before a crypto mine sneaks in,” said Taylor of the National Coalition Against Cryptomining.

The coalition has praised Markey’s proposed bill as an important first step, but activists want to see lawmakers take regulation even further by setting requirements for how crypto miners build digital ledgers.

The coalition is calling on Congress to limit the amount of energy that crypto mines can use, for example, by requiring a different system for building new blocks on the blockchain that ensures transactions are secure and not fraudulent.

The most energy-intensive way to build the blockchain is through the puzzle-solving process called proof-of-work. But blockchains can also be built without the same need for computational firepower through another process called proof-of-stake, which takes a fraction of the energy use. Instead of solving trillions of math problems, miners validate each new block, and “stake” an amount of cryptocurrency that they will lose if they improperly validate a block. Miners recoup their stake and receive a fee for correctly validating a new block in the blockchain.

At least one blockchain platform, ethereum, made that exact switch last year.

“If we can’t move away from proof-of-work crypto mining to a different form, then perhaps it ought to be banned,” Taylor said. “That’s kind of where we’re at.”

Elliot David, head of climate strategy at Sustainable Bitcoin Protocol, said trying to shift the entire industry away from the more energy-intensive proof-of-work process does not make sense.

Proof-of-stake is useful for things like smart contracts or securities, he said in an email, but bitcoin is meant to serve as money, which means the standard for security has to be higher and free from corruption.

The question should instead be how to use the energy-intensive process for verifying cryptocurrency transactions to boost development of renewables, he said.

As for federal regulation, David said, “I don’t think there’s anything wrong with wanting transparency in the sector, though it seems that this industry is being singled out.”

David suggested the industry could also adopt a voluntary reporting model like the certification system of renewable-powered mining established by Sustainable Bitcoin Protocol.

“Transparency and climate should be bipartisan issues, and we believe there are market solutions to that end,” David said.

But during a March Senate subcommittee hearing on crypto mining’s environmental impact, Markey repeatedly noted the importance of independent oversight for the evolving industry.

“People who profit from bitcoin can’t be left to grade their own homework,” Markey said.