Older fossil-fuel power facilities are being phased out across the United States in favor of renewable energy. However, some people are finding a new lease on life by mining bitcoin. An idled coal plant in upstate New York has been revived to mine bitcoin using natural gas. A once-struggling coal plant in Montana is now ramping up to do the same.
Investors are pouring money into power generating because of the high price of bitcoin and other cryptocurrencies, risking a backlash. Last week, Elon Musk announced that Tesla Inc. will no longer accept bitcoin as payment for vehicles due to worries over bitcoin mining’s usage of fossil fuels. The market was shocked, and bitcoin values have dropped by about 25% since last week.
The annual power usage of bitcoin mining, according to a University of Cambridge indicator, is over 130 terawatt-hours, more than three times what it was at the start of 2019. That would be more than Argentina’s total energy usage.
For years, Montana’s coal-fired Hardin Generating Station had been ailing. Marathon Digital Holdings Inc. MARA 12.77 percent, a Nasdaq-listed bitcoin miner, collaborated with Hardin’s owner late last year to turn the power plant into a bitcoin mining hub.
Marathon Digital’s CEO, Fred Thiel, said in an interview that the asset was “idle.” “We were able to obtain a significant amount of power at a very reasonable cost.”
The project is now being scaled up, with a capacity of more than 100 megawatts projected. BlackRock Inc. is one of Marathon Digital’s investors.
and the hedge fund Renaissance Technologies LLC, announced that by using the Montana coal plant, their break-even expenses for producing a bitcoin will drop to $4,600, which is 38% less than before.
By the first quarter of next year, the company hopes to manufacture at least 55 bitcoins each day, up from an average of two per day in 2020.
Marathon Digital claimed it had over $300 million worth of bitcoin on its balance sheet as of March, in an effort to show its confidence in bitcoin’s future and attract institutional investors to the company who might desire exposure to the cryptocurrency but couldn’t or wouldn’t invest in it directly.
Renaissance and BlackRock declined to comment.
Atlas Holdings, a private equity group, is behind one of the most ambitious—and contentious—projects. The firm, based in Greenwich, Connecticut, specializes in problematic company turnarounds. It purchased the Greenidge coal-fired power plant in 2014, after the Dresden plant in New York had been shuttered a few years beforehand due to its uneconomical operation.
Atlas changed the facility from coal to natural gas initially. Then, last year, it opened a data center to mine bitcoin with the electricity provided by the plant. According to the corporation, it presently has a mining capacity of 19 megawatts and wants to increase it to 85 megawatts by the end of 2022.
Air pollution and water runoff, according to Yvonne Taylor, vice president of the environmental charity Seneca Lake Guardian, will harm a small community whose clean air and water enable tourism, agriculture, and fishing in the Finger Lakes.
Local activists staged a march to the power plant’s gates last month, and several organizations have submitted petitions to New York’s Department of Environmental Conservation and Governor Andrew Cuomo requesting them to remove the plant’s permits.
The state, on the other hand, has declined to do so. The Department of Environmental Conservation, on the other hand, claimed last month that it was closely watching Greenidge’s planned expansion. It also stated that it would seek advice from the US Environmental Protection Agency on the facility’s greenhouse-gas emissions.
Greenidge said in March that it would go public through a merger with Support.com, SPRT 4.40 percent, a Nasdaq-listed company that provides outsourced customer-support services. Support.com stockholders would receive 8% of the combined company’s shares as part of the agreement.
In exchange, Greenidge stated that the cash on Support.com’s balance sheet will be used to fund the company’s expansion. Another potential benefit is that Support.com has more than $145 million in federal net operating loss carryforwards, which may reduce the merged company’s taxes significantly if the bitcoin activities prove successful in the future.
Greenidge did not answer to an inquiry about possible tax benefits. Last week, it said that it would begin purchasing voluntary carbon offsets and would invest a percentage of its mining income in renewable-energy initiatives. Greenidge stated that the power plant continues to supply electricity to the grid in addition to mining bitcoin.
“In answer to queries, Greenidge has turned an old coal-fired power station into a clean, reliable source of power for thousands of people as well as an integrated data processing center mining bitcoin,” the company said in a written response. “We are appreciative for the tremendous support we have received from the local community.”
Support.com did not respond to a request for comment.
The initiative has piqued the interest of state legislators in Albany, who are considering a bill that would impose a three-year freeze on crypto currency mining due to environmental concerns.
State Senator Kevin Parker, a Democrat who sponsored the bill, stated, “New York is actually the world’s capital for finance.” “However, we want want it to be done in a manner that is consistent with our values.”
Michel Amar, the CEO of Digihost Technology Inc., has a problem with the proposal. Mr. Amar and his son began expanding mining capacity in northwest New York state in 2015, expecting to take advantage of the inexpensive, clean power generated by hydroelectric power near Niagara Falls.
Their company generates more than 30 bitcoins a month and uses hydro power for more than 90% of its energy.
During the bitcoin price boom this year, the business also said it would purchase a 60-megawatt natural-gas plant north of Buffalo, New York. It expects to devote 35 megawatts to bitcoin mining at first, with the rest of the power going to the grid as needed.
Mr. Amar stated that the company would use natural gas obtained from animal excrement and other sources to partially power the plant.
Simultaneously, he stated that if the ban is implemented, the corporation is considering leaving New York and setting up shop in other states or Canada.
“What is the difference between an Amazon data center and a bitcoin data center?” he wondered. “Our goal and commitment is to be as environmentally friendly as possible.”