EPA last week took steps to rein in the environmental footprint of bitcoin miners.
On paper, the EPA actions weren’t related to cryptocurrency. EPA denied requests from current and former coal-fired power plants to keep using waste disposal sites filled with the toxic slurry produced from coal power, otherwise known as coal ash.
But two of the coal ash ponds — Greenidge in Dresden, N.Y., and the Sioux Energy Center in West Alton, Mo. — are located at power plant sites that are more than mere energy sources. The plants have been used to power computers that produce cryptocurrencies, a growing set of decentralized digital currencies becoming popular in the Internet age.
The agency is getting involved as more cryptocurrency mining operations examine using old coal plants as a power source (Energywire, June 24, 2021). Even a coal plant tied to the family of Sen. Joe Manchin (D-W.Va.) has examined going in that direction, until the proposal was rejected this month by West Virginia’s Public Service Commission (Climatewire, Jan. 5).
Proponents excited about this industry trend believe that as grid reliability becomes a greater issue in communities across the United States, mining for bitcoins — the best-known form of cryptocurrency — can help ensure that backup power generation is available to consumers by profitably keeping some plants online.
However, environmental advocates are concerned about the high energy needs of the cryptocurrency industry and said the actions taken by EPA demonstrate a novel way the agency can constrain Bitcoin’s environmental impacts in ways that fall outside the purview of financial regulators.
“EPA isn’t a cryptocurrency regulator. It’s a pollutants regulator. It seems like they’re using those laws to get at something the financial regulators can’t,” said Todd Phillips, director of financial regulatory and corporate governance at the Center for American Progress.
Greenidge Generation Holdings, the company that owns the former coal plant in Dresden, N.Y., acquired the facility in 2014 with backing from a private equity firm. The facility was converted to natural gas and is used primarily for bitcoin mining, while also providing some power to the local electric grid.
Ameren Missouri’s Sioux Energy Center is a coal-fired plant that began operating in 1967 and is scheduled for retirement in 2028. In April, the company disclosed that it had launched a bitcoin mining pilot project at the plant. A company representative said Friday that the company completed the pilot project in October (Energywire, Sept. 23, 2021).
In both actions taken last week, EPA denied extensions for plants to continue operating the coal ash ponds on their properties past a mandatory deadline. EPA considered Greenidge disqualified from getting an exemption because it no longer uses coal for power. The agency said Ameren’s application for an extension lacked all the information required for deciding on its request.
EPA also said that to qualify for an extension, the plants would need their respective grid operators to determine that ceasing operations would affect grid reliability.
Following EPA’s action, the agency has proposed giving both companies 135 days to demonstrate they are no longer receiving any kind of waste at their respective coal ash ponds, an EPA official said Friday. Immediately after that deadline, they would have to begin closing those waste sites.
Phillips said EPA demonstrated that the cryptocurrency space has more environmental considerations — like waste — to worry about beyond carbon emissions, which have been the primary focus of climate activists critical of the industry.
“I never really thought about what they’d do with the pollutants after they started up these new power plants,” Phillips said. “It’s something that we’re all going to have to figure out.”
Observers said the actions taken by EPA appeared to be its first words on the environmental impacts of cryptocurrency.
Before last week, EPA had not issued any press releases or agency statements addressing cryptocurrency, according to an E&E News review of EPA’s website.
EPA has previously funded independent research into pollution from cryptocurrency production, including a 2019 study that investigated how to quantify the monetary health and environmental damage posed by mining bitcoins and other cryptocurrencies.
But the actions taken on the coal ash ponds appeared to be the first time EPA has formally addressed the environmental stewardship of individual cryptocurrency miners, said Judith Enck, who served as administrator for EPA Region 2 under the Obama administration.
Enck said members of the public “probably have some indication” from the EPA actions about how the agency will address the coal-to-bitcoin trend.
“It’s an open question. … Are they on the hook to clean them up, these landfills and ponds?” she said.
EPA said on Friday that it couldn’t confirm that this was the first agency decision concerning a company mining cryptocurrency. The decisions on Greenidge and Ameren’s coal ash requests were part of a larger set of rulings from the agency on the cleanup schedule for coal ash ponds (Greenwire, Jan. 11).
"EPA is moving aggressively to protect human health and the environment from the impacts of coal ash pollution," an EPA spokesperson said in a statement. The spokesperson said EPA "expects to issue additional decisions in the coming months" on the closure of coal ash ponds across the country.
‘Low-cost electricity’
For companies like Greenidge Generation Holdings, there are a lot of advantages to holding court in a power plant.
Greenidge boasted in a September filing with the Securities and Exchange Commission that its power generation facility gives it access to “low-cost electricity” important to “profitably mine bitcoin on a large scale.”
The power generation capacity allows it to operate without relying on third-party power agreements, according to the company filing, and allows its power to be exempt from transmission and distribution charges from local utilities.
In addition, it allows Greenidge to make money from being available to supply power to the grid, even when it is not needed. All the energy capacity at the Greenidge plant not used in mining bitcoin is made available for sale through the New York Independent System Operator, or NYISO, the filing says.
The company acknowledges that it plans to make less and less electricity from the plant available to the grid over time, a trend it has said will continue as more existing power capacity goes toward ramping up its bitcoin mining operations.
This fact could make it more difficult for Greenidge to get permission for flexibility from EPA in closing its coal ash pond.
That’s because EPA proposed that for Greenidge, or Ameren, to get an extension that would let it keep its ponds open for longer, it would need its grid operator to determine that cutting off operations would cause reliability issues.
Greenidge Generation Holdings CEO Dale Irwin said in a statement to E&E News on Friday that the company agrees that “all coal ash ponds should be closed as quickly as possible and, as the company that permanently ended coal-fired operations at the facility, we’re working to do that.”
With the switch to natural gas, Greenidge doesn’t use coal for power generation, and it sought the extension from EPA in order to dispose of primarily stormwater drainage into the pond, according to the company’s request to EPA.
The company had asked for the extension because the location is a part of its state water discharge permit, “and it could not simply be closed and capped without creating a new destination for our storm water and other remaining water flows," the request said.
“We will continue to work with the state to reroute the water and complete the pond’s closure in a safe manner,” Irwin said.
A spokesperson for Ameren told E&E News that the company is currently reviewing EPA’s decision.
The coal-to-crypto pipeline
Mining for cryptocurrencies — like mining for any mineral commodity — requires a lot of energy.
To mine for bitcoins, high-powered computers, called rigs, are deployed to solve cryptographic puzzles that become increasingly difficult over time. Solving a puzzle unlocks cryptocurrency, a transaction that is then recorded to a unified ledger known as a blockchain.
Such computing power demands immense amounts of energy, which has led to scrutiny from Democratic lawmakers and environmental activists concerned about the emissions associated with cryptocurrency worsening the warming of the planet. A House Energy and Commerce subcommittee will be holding a hearing on Thursday addressing the sector’s environmental impacts (E&E Daily, Jan. 18).
Supporters of the coal-to-crypto trend argue that, at a time when reliability is a growing concern, companies have found a profitable way to ensure that more reserve power is available to the grid in the event of disaster.
If deployed responsibly and sustainably, they say, funding operational power plants through mining cryptocurrency could be part of the future of electricity generation.
“The most profitable way for them to generate electricity is to power some mining rigs, [so] you have places where you can create a bunch of energy or there’s no demand for energy for it, so you’re seeing bitcoin mining,” said David Mccarville, a Phoenix-based attorney who teaches a course on blockchain at Arizona State University.
“It acts effectively as a private market subsidy,” Mccarville said.
However, the practice has plenty of opponents who are worried about climate change and energy efficiency.
David Gerard, an author who has written two books investigating cryptocurrency and blockchain, said in an interview that “anyone who calls setting up a fossil fuel power plant to turn pollution into money” is “not an environmental steward.”
Gerard said the belief underlying cryptocurrency’s focus on coal has been one factor: The companies want “the cheapest electricity they can get.”
“[It’s] comically stupid, but incredibly bitcoin,” he said.
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