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Increased cryptocurrency mining will harm vulnerable communities, environmental advocates say

Maralie Armstrong-Rial remembers first hearing about cryptocurrency in 2006. The artist and visiting assistant professor at Brown University and the Rhode Island School of Design was in a digital master’s program at the time but blew off the virtual currency as something only “über nerds” would use. Fifteen years later, Armstrong-Rial realized Bitcoin was not just a passing fad and thought it might be worthwhile for her to research. In learning about China’s recent decision to ban crypto mining, Armstrong-Rial realized that the method of acquiring the currency is highly energy intensive and has a large carbon footprint, which requires planting at least 300 million new trees to offset. She said she became increasingly concerned to see artists and businesspeople alike adopting the idea that cryptocurrency could somehow “save the planet” by decentralizing the banks. Now, Armstrong-Rial is among a growing group of people sounding the alarm on crypto mining and its harmful effects in Seneca Lakes.

“It became exceptionally scary for me to see people saying that cryptocurrency can help people who don’t have money, make money,” says Armstrong-Rial. “It’s actually an ‘emperor has no clothes’ situation.”

While cryptocurrency has the potential to dismantle a banking system where there is a central authority responsible for the decisions that affect the economic fortunes of entire countries, big banks are already investing in cryptocurrencies and their related services. Even worse, their environmental footprint could put us past the warming targets set by the Paris Agreement, according to a report by Nature Climate Change.  

Proof-of-work “mining,” which is the process by which currency is entered into circulation, is performed by high-powered computers continuously running software that solves a complex computational math problem. When the problem is solved, the computer is awarded the next collection of currency. Millions of calculations are solved each second. When China made the decision to ban cryptocurrency mining in September because of the vast energetic drain running thousands of computers 24/7 entails, the U.S. officially became the largest mining hub in the world. The U.S. now makes up more than 35% of the hashrate, which refers to the amount of computational power used by miners dedicated to the minting of new bitcoins and verification of new transactions.

Mining companies have set their sights on New York and Texas as the main hubs because of their preexisting infrastructure, low energy prices, and favorable government policies. But with mining using more electricity than many countries, including Chile and Denmark, environmental advocates and locals are concerned about what this means for their communities.

In New York, most companies have occupied mothballed coal-fired power plants in small towns like Seneca Lake and North Tonawanda. In Seneca Lake, locals have already seen the damage the Greenidge Generation LLC facility has wrought on their environment, including air pollution and rising lake temperatures. The facility pulls up to 139 million gallons of Seneca Lake water out a day to cool the facility, and discharges up to 135 million gallons daily, which can reach temperatures of 108 degrees Farenheit. The heated water is discharged directly into a trout stream, stressing the fish and causing harmful algae blooms.

“We’re very concerned that this thermal pollution that the company is putting into the lake every single day will increase the incidences of harmful algae blooms,” said Yvonne Taylor, vice president of Seneca Lake Guardian, a nonprofit conservation organization.

Seneca Lake, which is a rural town primarily made up of farming, brings in about $3 billion a year to New York state’s economy from the wine industry. Now the livelihood of grape farmers and locals, who are facing rising electrical costs, is in peril.

“All of that is being threatened by this predatory corporation that has swooped up this old power plant, [and that] is burning fossil fuels, emitting greenhouse gases, sucking up our water, and then discharging it back at high temperatures,” Taylor said. “If we allow it to continue unchecked, we’ll never achieve our climate goals.”

In North Tonawanda, New York, the Canadian cryptocurrency company Digihost purchased a 55-megawatt retired power plant formerly called Fortistar in the suburbs of Buffalo with the intent of running it exclusively as a cryptocurrency mining operation. Their plans eventually stalled because of a 180-day moratorium on permits from the public service commission and the Department of Environmental Conservation. Located just two miles away from what is defined as an “environmental justice community”—a community that is disproportionately impacted by climate change and air pollution and has unequal access to clean energy—the Digihost operation would only serve to hinder the lives of North Tonawandans and the surrounding community.

“The concern is that there are [many] … retired power plants in upstate New York … and many of them are located in environmental justice communities, which tend to be a higher percentage of Black and brown New Yorkers,” said New York Assemblywoman Anna Kelles. “The negative repercussions of climate change tend to be experienced the most by the people who are least contributing to the causes of climate change.”

Kelles is fighting to place a moratorium on cryptocurrency mining in the state until environmental studies can be done and regulations can be put in place. She is hoping to restart the conversation around her legislation in this coming session of the environmental conservation committee and make it to the floor.

Mining companies suggest they offset their carbon footprint, but those offsets are not typically local to the immediate impacts mining has on their surroundings.

“Those offsets can be anywhere in the world,” says Kelles. “The truth is at the end of the day, the impact on the environment is hyperlocal and that is not being mitigated by these offsets.”

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