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Some locals say a Bitcoin mining operation is ruining one of the Finger Lakes. Here’s how.

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Summer on Seneca Lake, the largest of the Finger Lakes in upstate New York, is usually a time of boating, fishing, swimming, and winetasting. But for many residents of this bucolic region there’s a new activity this season — protesting a gas-fired power plant they say is polluting the air and heating the lake.

“The lake is so warm you feel like you’re in a hot tub,” said Abi Buddington, a resident of Dresden, N.Y., whose home is near the plant.

The facility on the shores of Seneca Lake is owned by private-equity firm Atlas Holdings and operated by Greenidge Generation LLC. They have increased the electrical power output at the gas-fired plant in the past year and a half and use much of that fossil-fuel energy not to keep the lights on in surrounding towns, but for the energy-intensive “mining” of Bitcoin.

Bitcoin is a cryptocurrency — a digital form of money with no actual bills or coins — but “mining” it, a way of earning it, requires massive, high-performance computers. The computers earn small rewards of Bitcoin by verifying transactions in the currency that are occurring on the internet around the globe. The math required to verify those transactions and earn bitcoins gets more complex all the time, and demands more and more computer power. At Greenidge, the computers operate 24/7, burning through an astounding amount of real energy, and producing real pollution, while collecting virtual currency.

One estimate from the University of Cambridge says global Bitcoin miners in a year use more energy than Chile. When this energy comes from fossil fuels, the process can add significantly to carbon emissions. The Greenidge plant houses at least 8,000 computers and is looking to install more, meaning it will have to burn even more natural gas to produce more energy.

Private-equity firms like Atlas buy companies, often using debt, and hope to sell them later at a profit. They are secretive operations with investments that can be hard to track. Such firms have grown significantly in recent years and currently oversee $5 trillion for pension funds, insurance companies, university endowments and wealthy individuals.

In the past 10 years, private-equity firms have poured almost $2 trillion into energy investments, according to Preqin, a private-equity database. Some $1.2 trillion of this money has gone into conventional energy investments such as refineries, pipelines, and fossil-fuel plants, versus $732 billion in renewables like solar and wind power, Preqin said.

As investor criticism prompts some public companies to dump fossil-fuel assets, private-equity firms are ready buyers. In 2019, for example, powerhouse Kohlberg, Kravis & Roberts, or KKR, acquired a majority stake in the troubled Coastal Gaslink Pipeline project, a 400-mile fracking gas pipeline in British Columbia, Canada, that has drawn protests from First Nations people whose land it crosses and citations from a regulator.

In a report last fall, the Environmental Assessment Office, a provincial agency, said the project failed to comply on 16 of 17 items inspected. As a result, Coastal Gaslink was ordered to hire an independent auditor to monitor its work to prevent site runoff that can pollute streams and harm fish.

Because private-equity firms expect to hold their investments for only a few years, they often keep alive fossil-fuel operations that would otherwise be mothballed, said Tyson Slocum, director of the energy program at Public Citizen, a nonprofit consumer advocate. “Private equity thinks it can squeeze a couple more years out of them,” Slocum said. “And they are often immune from investor pressures.”

In 2016, for instance, private-equity firm Arclight Capital Partners of Boston bought into Limetree Bay, an oil refinery and storage facility in St. Croix, U.S.V.I. The operation had gone bankrupt after a series of toxic spills but reopened in February 2021. Just three months later, it was shuttered after unleashing petroleum rain on nearby neighborhoods.

Arclight, which has invested a total of $23 billion since its 2001 founding, gave up operational control of Limetree Bay in early 2020, a person briefed on the matter said, and exited in an April restructuring, just before the accident.

A spokeswoman for Arclight said the firm “takes its responsibilities to protect the environment and support local communities seriously and will continue to strive to meet the highest standards.”

Because private-equity firms are secretive, their investors may not know what they own or the risks, said Alyssa Giachino of the Private Equity Stakeholder Project, a nonprofit that examines the industry’s impact on communities. She thinks pension funds and their beneficiaries may end up with more fossil-fuel exposure than they realize and may not have a full appreciation of the risks. They include heavy impacts on communities of color, risks of litigation and environmental penalties, and long-term climate impact, she added.

Private-equity titan KKR is a huge energy investor on behalf of endowments, public pensions and other institutional investors. Like many of its private-equity brethren, KKR has deployed far more money in conventional energy assets like the Coastal Gaslink Pipeline than renewables.

Between 2010 and 2020, KKR invested $13.4 billion in conventional energy assets versus $4.9 billion in renewables, according to a recent estimate by Giachino. KKR did not dispute these figures in emails with NBC News.

KKR’s spokeswoman said the firm is “committed to investing in a stable energy transition, one that supports a shift to a clean energy future while recognizing the ongoing importance of supplying the conventional energy needed for well-being and economic growth around the world today.” The company says it communicates its investment approach, progress and goals transparently to stakeholders. KKR recently added a team focused on energy transition investments in North America.

Private-equity investors sometimes “leave behind messes for someone else to clean up,” said Clark Williams-Derry, energy analyst at the Institute for Energy Economics and Financial Analysis. “The real trouble happens when the private-equity firm comes in and is just trying to strip mine the company and the workers for whatever they’re worth,” he said.

Not so Greenidge, the Atlas-owned operator of the Seneca Lake power plant, said Jeff Kirt, its chief executive officer. “The environmental impact of the plant has never been better than it is right now,” he told NBC News. The lakeshore facility is operating within its federal and state environmental permits, he added, and has created 31 jobs, a company-commissioned report shows.

Local residents rally against the Greenidge bitcoin mining plant on June 5, 2021 at a Department of Environmental Conservation office in Avon, N.Y.Moni Ginn

Cryptocurrency’s potential profits add to the appeal of buying low-cost and carbon-intensive power plants, Williams-Derry said. While natural gas-fired plants like Greenidge’s in New York are not as problematic as those that use coal, they still generate damaging greenhouse gases, he said.

After Greenidge took over the plant, Kirt told NBC News, the company sought ways to earn higher returns on its surplus energy. It struck gold with Bitcoin mining. During the 12 months ending Feb. 28, 2021, the company said it mined 1,186 bitcoins at a cost of approximately $2,869 each. Bitcoin, which gyrates feverishly, currently trades at around $34,000.

‘A horrible business model’

Greenidge’s owner, the private-equity firm Atlas, is on a roll. It recently raised $3 billion from investors, doubling its assets to $6 billion. Atlas owns stakes in 23 companies; two are power generators — Greenidge in New York and Granite Shore Power in New Hampshire.

Atlas bought the 150-acre, coal-fired Greenidge plant in 2014, three years after it had closed. Converted to natural gas, the almost 80-year-old plant began operations in 2017, generating energy to the grid only at times of high demand.

In 2019, Greenidge began using the plant to power Bitcoin mining and increased its output. It still supplies surplus power to the local electrical grid, but a lot of the power it generates is now used for Bitcoin mining. And it has plans for expansion at both Greenidge and elsewhere, company documents show. Last week, Greenidge announced a new Bitcoin mining operation in Spartanburg, S.C., at a retired printing plant owned by Atlas.

In March, Greenidge said its current Bitcoin mining capacity of 19 megawatts should reach 45 by December and may ramp to 500 megawatts by 2025 as it replicates its model elsewhere. Larger gas-fired plants in the U.S. have capacities of between 1,500 and 3,500 megawatts.

A crypto-mining facility on the shores of Seneca Lake in New York is operated by Greenidge Generation.NBC News

Also in March, Greenidge announced a merger with Support.com, a struggling tech support company whose shares trade on Nasdaq. The deal, expected to close in the third quarter of this year, will give Atlas control of the merged company and access to public-investor morney. Andrew Bursky, founder of Atlas, owns between half and three-quarters of Atlas, a regulatory filing shows. Neither Atlas nor Bursky would comment for this article.

“These crypto operations are looking for anywhere that has relatively cheap power in a relatively cool climate,” said Yvonne Taylor, vice president of Seneca Lake Guardian, a nonprofit conservation advocacy. “It’s a horrible business model for all of New York State, the United States and for the planet.”

Greenidge disputes this view and said last month its operations would soon be carbon neutral. It is buying credits that offset the plant’s emissions from an array of U.S greenhouse gas reduction projects.

Judith Enck, a former EPA regional administrator and a senior fellow and visiting faculty member at Bennington College in Vermont, has doubts. “Carbon offsets is not a particularly effective way to reach greenhouse gas reduction goals,” she said in an email, “and there is no system in place to regulate it in New York.”

One reason Bitcoin mining is seen as a threat to the environment, critics say, is that new operators of power plants may continue to use permits issued years earlier without undergoing an​​ in-depth ​environmental assessment.

The Seneca Lake power plant, owned by Greenidge Generation LLC, on Jan. 10, 2021.Abi Buddington

So far, legal challenges to the Greenidge operation have failed. Greenidge’s air​ permit is up for renewal in September, said Mandy DeRoche, deputy managing attorney in the coal program at Earth Justice, a nonprofit environmental advocate.

“We’ve asked the Department of Environmental Conservation to take a hard look and think about it as a new permit not just a renewal.”

Materials issued by Greenidge say state environmental authorities have determined that the plant “does not have a significant impact on the environment.”

Still, emissions from the plant are rocketing. At the end of 2020, even though it was operating at only 13 percent capacity, the plant’s carbon dioxide equivalent emissions totaled 243,103 tons, up from 28,301 tons in January, according to regulatory documents received by Earth Justice under an open records request. Before it began mining Bitcoin, the plant generated carbon emissions of 119,304 tons in 2018 and 39,406 tons in 2019, federal documents show.

On June 5, locals staged a protest against the plant at a nearby DEC office in Avon, N.Y. If regulators don’t rein in the Greenidge plant, they say, some 30 other power plants in New York could be converted to Bitcoin mining, imperiling the state’s emission-reduction goals.

“New York had established a goal in law of reducing greenhouse gas emissions by 40 percent by 2030,” Enck said. “The state will not reach that goal if the Greenidge Bitcoin mining operation continues.”

Greenidge declined to comment on Enck’s statement.

Maureen Wren, a spokeswoman for DEC, said in a statement that it is closely monitoring Greenidge.

“DEC will ensure a comprehensive and transparent review of its proposed air permit renewals with a particular focus on the potential climate change impacts and consistency with the nation-leading emissions limits established in the state’s Climate Leadership and Community Protection Act. As the greenhouse gas emissions associated with this type of facility may be precedential and have broader implications beyond New York’s borders, DEC will consult with the U.S. EPA, the state’s Climate Action Council, and others as we thoroughly evaluate​ the complex issues involved.”

Water usage by Greenidge is another problem, locals say. The 8,000 computers mining for Bitcoin in the plant require massive cooling, achieved with lake water. The current permit allows Greenidge to take in 139 million gallons of water and discharge 135 million gallons daily, at temperatures as high as 108 degrees Fahrenheit in the summer and 86 degrees in winter, documents show. Rising water temperatures can stress fish and promote toxic algae blooms, the Environmental Protection Agency says.

Although locals protesting the plant say the lake is warmer with Greenidge operating, a full thermal study has not been produced and won’t be until 2023. Greenidge recently published average discharged water temperatures from March 1 to April 17, during the trout spawning season; they ranged from around 46 degrees to 54 degrees, with differences between inflow and outflow of between 5 degrees and 7.5 degrees.

Over longer periods, temperatures have spiked, though. NBC News reviewed a February 2021 email from DEC to a local resident stating that since 2017, the plant’s daily maximum discharge temperatures have been 98 degrees in summer and 70 degrees in winter.

Abi Buddington.NSP Studio

The Greenidge spokesman said: “The limits already protect the lake’s fishery and the public health, and they have been clearly validated as not concerning.”

Not all local residents want Greenidge gone. The Dresden Fire Department welcomed the company’s $25,000 donation for a jaws-of-life machine and the school district was grateful for a $20,000 gift to develop education and enrichment programs.

Gwen Chamberlain, a former local newspaper editor, is one of three members of a community advisory board working with Greenidge to advance the region’s economy. “The tax base is growing, and that’s helping the school, the county, and the town tremendously,” Chamberlain told NBC News. “Their employment has always been good, solid jobs for local workers.”

Earlier this month, an economic study commissioned by Greenidge said the company made payments to local authorities in lieu of real property taxes of $272,000 in 2020.

Peter Mantius, a former journalist who writes about environmental politics in the region, said these payments, while greater than zero, are far less than what the plant once generated, thanks to a favorable tax assessment arrangement.

“The amount they paid instead of regular real estate taxes to the town and local schools and county — when you add those together it’s a fraction, maybe a quarter of what the old owner paid,” Mantius said.

Meanwhile, residents like Buddington feel compelled to keep fighting. “My concern is if we don’t do something now,” she said, “it’s going to be so much harder to undo.”


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