New York faces another legal battle over a proposed crypto mining power plant

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Environmental groups are urging New York State to investigate the purchase of a gas-fired power plant by a crypto mining company, arguing in a new lawsuit that turning the power plant into a crypto mine would violate the state’s climate goals and would cause more pollution in nearby neighborhoods.

Sierra Club and the Clean Air Coalition of Western New York filed a lawsuit Friday challenging the New York Public Service Commission’s (PSC) approval of the sale. Under state law, the commission must give the green light before the transfer of ownership of a power plant can take place. So far, the commission has mainly focused on whether such a sale would affect residents’ electricity rates or create a monopoly. The commission must take climate change and environmental injustice into account because of a sweeping climate law passed in 2019, the new lawsuit says.

“The law says you can’t just ignore these really serious consequences”

“The law says you can’t just ignore these really serious consequences,” said Dror Ladin, a senior attorney at Earthjustice, the nonprofit environmental justice group representing the plaintiffs. “Leaving the factory running 24 hours a day to mine crypto will be very bad for the climate as well as for and for the people in the area.”

The power plant, called Fortistar, is located in the small town of North Tonawanda, located between Buffalo and Niagara Falls. Typically, Fortistar is used as a so-called “peaking plant”, which is not often started up to meet peak electricity demand during an energy crisis. The plant has only been operating between 10 and 25 days a year since 2017, according to Environmental Protection Agency data cited in the complaint. That schedule is expected to change dramatically once Canadian crypto mining company Digihost moves in, which is why some residents are concerned about their potential new neighbor.

Digihost petitioned the PSC in April 2021 to approve the purchase of Fortistar. According to an environmental assessment form the company filed with North Tonawanda later that year, it planned to run the plant “24/7” to power its crypto mining rigs. Crypto companies consume massive amounts of electricity to mine Bitcoin, more than many small countries use in a single year. To validate new transactions on Bitcoin’s blockchain and earn new tokens in return, “miners” must solve difficult computational puzzles using specialized hardware. The more hardware you have and the more energy you use, the more likely you are to earn new tokens.

That causes a lot of pollution in the process, especially for operations that get all their electricity from a gas-fired plant like Fortistar. So some local residents are concerned that running Fortistar 24/7 would increase its carbon footprint.

“My oldest son has asthma and I am concerned about how the pollution will affect him,” writes a resident who lives about a quarter mile from the gasworks in an affidavit accompanying the environmental groups’ complaint. “I have chronic obstructive pulmonary disease and I am also afraid that the increased pollution will worsen my condition.”

New York also has its climate goals to consider. The state has committed to reducing greenhouse gas emissions by at least 85 percent by 2050. To achieve that goal, the climate law it passed in 2019 requires government agencies to consider whether their decisions would jeopardize those goals or place a disproportionate burden on “underserved communities.” While the state is still finalizing the criteria for what makes a community “disadvantaged,” it has already been determined that some censuses near Fortistar can handle more pollution than 90 percent of the state.

Nevertheless, New York’s Public Service Commission approved Digihost’s petition to buy the factory in September 2022. decision.

The lawsuit filed Friday is the first to prompt the PSC to broaden the scope of its decision-making, citing New York’s climate law. If the environmental groups are successful, the commission should reconsider its approval of Digihost’s planned takeover of the plant. At that point, Digihost could have a hard time convincing the state that its new crypto mine would not jeopardize climate goals.

In a similar battle over a crypto mining power plant in New York called Greenidge, the Department of Conservation of Nature denied air permits because its operations “would violate statewide greenhouse gas emission limits set by the Climate Act.” In November, Governor Kathy Hochul signed a two-year moratorium on new permits for fossil fuel power plants that want to mine Bitcoin. That gives the state time to conduct a broader assessment of the environmental impacts of crypto mining.

Both Greenidge and Fortisar are excluded from that moratorium because they applied for air permits before the law was passed. Greenidge is still operating as it appeals the state’s decision on its air permit. But environmentalists are optimistic that they may be able to prevent a crypto mine at Fortistar from getting off the ground in the first place.

Neither Digihost nor Fortistar responded to a request for comment from The edge, while the PSC said in an email that it does not comment on pending litigation. Of course, Digihost is still struggling with the ongoing crypto winter that has made it less profitable to mine Bitcoin. But in a January press release, the company touted a 60 percent year-over-year increase in its Bitcoin production by 2022. The announcement also says that Digihost has already installed “mining infrastructure” in North Tonawanda and “expects the acquisition to be rounded”. in the first quarter of 2023.

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