The crypto reckoning in the Finger Lakes

Seneca Lake is a mirror to the heavens. At sunrise, its waters are pink and purple pastels. Ducks and Canada geese languorously traverse its lightly undulating surface. A mallard spreads his wings, lifting off into the frigid morning as ripples spread out behind him on the watery runway.

It’s a perfectly bucolic scene: quintessential Finger Lakes, really. To witness this early-morning ritual is to see what’s taken place uninterrupted for eons in one of the most beautiful places in New York; Seneca Lake is one of two handfuls (and one extra digit) of watery tendrils stretching north to south in the middle of the state.

But while the scene may be familiar, the soundtrack is anything but. The quiet you’d expect on the lakeshore has been replaced by a perceptible thrumming, like a breath caught in the chill air. It doesn’t dissipate. Instead, the artificial noise washes over the lakeshore, thrusting what was once timeless squarely into 2022 and the crypto-mining era.

The Greenidge power plant sits just south of Keuka Lake Outlet, a waterway that pours into Seneca Lake. The plant is a gas-fired peaker plant on paper, its three steam-pumping smokestacks visible over the tiny village of Dresden. But tucked behind the barbed wire fence covered in “No Trespassing” signs is a massive bitcoin mining operation. The plant is home to 17,300 mining rigs, all running “behind the meter.” In essence, they’re running on gas power generated at the Greenidge facility basically 24/7, and the plant’s owner, Connecticut-based private equity firm Atlas Holdings, wants to expand operations even further. That expansion could turn the low-level thrum on Seneca Lake’s northwestern shore into a full-blown cacophony.

The sun rises over the Greenidge power plant and bitcoin mine. Photo: Brian Kahn/Protocol

For critics of the plan, the noise is only the beginning of the problem. Bitcoin mining is also an energy-intensive process, and using natural gas to allow thousands of GPUs to digitally dig for magic internet money is a climate nightmare. What’s happening at Greenidge could also be a template for other gas power plants at or near death in upstate New York, a move that would all but certainly blow up the state’s ambitious climate goal.

A handful of local residents have placed themselves between New York and the bitcoinocalypse, led by a self-described “accidental activist,” winemakers and a state representative. They all say they're not opposed to crypto itself, just the wasteful proof-of-work mining required by the bitcoin network. Greenidge also faces the prospect that its air pollution permits, up for regular renewal, will be denied by the state Department of Environmental Conservation. (Protocol reached out to the company for comment with specific questions, and it sent a broader statement, parts of which are included in this piece.)

But this is even more than a fight over noise or the climate. The battle over Greenidge is a battle — one of many to come — over the fate of the region, and how it uses the resources the past has left it with to chart a course into the future.

Part one: Methane gas

Roughly 390 million years ago, Seneca Lake didn’t exist. Instead, the area was a shallow inland sea. Sediment flushed into the sea. Plant matter, tiny creatures, silt and more settled on the bottom and slowly compacted, forming a veritable layer cake of sedimentary rock known as the Marcellus Shale. It extends thousands of feet thick, and the icing sitting between some of the bottom layers is methane gas. The fracking revolution of the late 2000s allowed oil and gas producers to plunge wells down into the shale and slurp up the icing, much to the detriment of the climate and the local environment.

The companies looking to make a buck off the region’s fossil fuel legacy are what turned Yvonne Taylor into an “accidental activist.” Taylor’s family has ties to the lake stretching back seven generations, and she lives on their plot of land on the east side of the lake. “I learned how to swim in Seneca waters before I learned to walk,” she said.

I met Taylor for lunch while she was on spring break from her day job as a speech language therapist for at-risk youth, ensconced in the dining room of the Watkins Glen Harbor Hotel with a window seat looking out onto the slate-gray skies over Seneca Lake. She spoke in perfect soundbites but came across wholly human, and talked about the lake as a person, referring to it as “she” numerous times in our talk. “This lake is literally in every fiber of my being,” she said.

Yvonne Taylor is a speech language therapist who has led local opposition to the Greenidge power plant’s bitcoin mine expansion. Photo: Brian Kahn/Protocol

That connection led Taylor to feel a need to protect it. In 2010, when a Houston-based company wanted to turn salt caverns on Seneca Lake’s western shores into a storage hub for propane, Taylor led the charge against the proposal, eventually resulting in the company selling its stake and the New York DEC denying a key permit that essentially killed the project. But the fight didn’t stop there. “What we learned along the way and all the connections we made convinced us that there were other fights to fight in the Finger Lakes that we could lend our expertise and our experience to,” Taylor said.

At Greenidge, Taylor and her group found a new foe. The first bitcoin mining rigs landed on the property in 2019, and that operation has expanded at a steady clip since. To call it a power plant, at least in the primary public-use sense, almost feels disingenuous at this point. The plant took in $88 million in mining revenue against just $9 million for generating power last year. Last March, the company announced it wanted to install a total of 85 megawatts of mining capacity by the end of this year and a staggering 500 megawatts of capacity by 2025. That’s the equivalent of enough electricity to power 400,000 or so homes, all being put toward mining crypto.

In many ways, the plant is an idealized version of what Square laid out in a white paper last year, which said that “the energy asset owners of today can become the essential bitcoin miners of tomorrow.” That paper was specifically about how to get renewable bitcoin projects. Greenidge shows, though, that the future Square envisioned is here. It’s just fossil-fueled, and anything but essential to the planet.

“It's personal to me because of my family’s past here on the lake,” Taylor said. “But I think that it's up to all of us now to stand up and do whatever it is we can because we are facing the climate crisis.”

Taylor and her group aren’t taking a stand against cryptocurrency, though. They’re taking a stand against bitcoin, which relies on proof of work, a process where computers race against each other to solve a math equation. The first computer to do so mints a block and earns a reward of tokens, in this case, bitcoins. The process is what makes the network secure and decentralized. But it comes with a tradeoff: All those computers racing each other waste massive amounts of energy in their quest to mint a given bitcoin. As a result, miners scour the world for places with cheap energy to set up shop as a way to maximize profits. And after crackdowns in China, Iran and elsewhere, they’ve flocked to the U.S. — and upstate New York specifically — for its cheap and abundant methane gas. In an SEC filing, Greenidge’s owners highlighted that the plant is hooked up to a series of pipelines that provide “relatively low market rates for natural gas.”

The Finger Lakes is split between two futures. In one, natural gas is a bridge to more bitcoin mining, a move that could endanger the climate and the region’s reputation as a major wine and tourism hub. In the other, the stunning natural resources are used sustainably and natural gas — and using it to mine bitcoin — becomes part of the past. Photos: Brian Kahn/Protocol

“I absolutely see there being potential because other forms of validation do not use the amount of energy that proof of work does,” said Anna Kelles, a state assembly member from the Finger Lakes region who has introduced a crypto moratorium bill. “The environment is absolutely not a roadblock with respect to cryptocurrency, as long as we're not using proof of work.”

Alternative mechanisms to secure the blockchain exist. That notably includes proof of stake, another process for controlling crypto that uses only a tiny fraction of the energy. Ethereum, the world’s second-largest cryptocurrency, is in the process of transitioning to a proof of stake system, and a number of other cryptocurrencies use it as well. But bitcoin is likely to continue to rely on proof of work. That all but ensures a regulatory showdown in the Finger Lakes and other parts of the world trying to clean up the grid.

Part two: Regulation

If Greenidge continues to mine bitcoin, it would make it harder for New York to achieve its emissions reduction goals under the Climate Leadership and Community Protection Act. The legislation, passed in 2019, requires the state to reduce greenhouse gas emissions 40% by 2030 and at least 85% by 2050. Lawmakers and scientists have found that the plant could work against the state’s climate goals in a number of ways.

The plant-turned-bitcoin mine would pump 1 million tons of carbon dioxide into the atmosphere at full capacity, according to its owners’ own assessment. But the methane gas it relies on is another source of warming, one that those estimates don’t fully capture.

“All the material that Greenidge has sent to the DEC refuses up to this point to acknowledge upstream methane emissions, as is required by the CLCPA,” said Anthony Ingraffea, an emeritus engineering professor at Cornell, referring to leaking extraction and transport infrastructure that give methane gas a huge warming footprint. Methane is also roughly 80 times more potent than carbon dioxide at heating up the planet, making those emissions particularly troublesome.

Greenidge points to support from the IBEW Local 840 and other local politicians as a reason for staying in business. The company also maintains it is carbon neutral because it has bought offsets for the entirety of its carbon dioxide emissions tied to mining from one of three verified registries that, it said in an emailed statement, are "ensuring that any projects funded by Greenidge reduce emissions or increase sequestration of greenhouse gas in a manner that is real, permanent, and verifiable." But offsets are no substitute for actually cutting emissions by reducing fossil fuel use , and they can even lead to more carbon pollution. Offsets also fail to account for local impacts like noise and air pollution, as well as the state’s own climate goals.

“This is all magic, just waving hands around and hoping that people get it,” Ingraffea said of Greenidge’s approach to offsets and ignoring methane. “‘Oh yeah, we're green. We're 100% carbon neutral.’ Those are the magic words somebody says, and they're forgiven all their sins.”

Greenidge alone wouldn’t blow up the planet or stop New York from realizing the emissions reductions required by the CLCPA, though it would certainly make things harder. In its statement, Greenidge Generation said the "facility can represent no more than 0.2% of the state's emission targets for 2030 under the CLCPA. The application asks for zero increase in permissible emissions and includes the identification of projects that have the potential for an additional 40% reduction in emissions." The company did not answer specific questions about its upstream emissions, where exactly its offsets projects are located and why it views them as a good investment.

But what happens to the bitcoin mine is also being closely watched by other miners. If its air pollution permits are renewed, it would essentially signal that upstate New York’s many aging or shuttered power plants are ready to become zombified on the cheap, too. Power plants in the towns of North Tonawanda , Somerset and elsewhere are already on the horizon — or already working — as mining operations. Together, they would create perhaps an insurmountable challenge for New York to meet its climate goals.

Hector Falls Creek tumbling toward Seneca Lake under cloudy skies. It’s one of the main places around the lake to pull off the road and savor the views. Photo: Brian Kahn/Protocol

“If the plant continues to operate and gets permitted to operate at 100% capacity, it alone would not completely thwart our ability to get to the 2030, 2040 and 2050 goals,” Ingraffea said. “But it opens the door. If the DEC allows that plant to require using natural gas at 100% capacity, how in the hell are they going to stop the other proposed plants from doing the same?”

“There are five former coal-fired power plants in upstate New York that are either currently operating like Greenidge or being proposed to operate like Greenidge,” he continued. “They would collectively be emitting 8% of our CLCPA 2030 target. If they're allowed to take up 8% of our target, who's going to pick up the slack? That means other people and other industries are going to have to do 8% more work.”

Kelles has introduced bitcoin-mining moratorium legislation in an effort to stop the industry in its tracks. Last legislative session, it didn’t make it to the floor. But it’s gaining steam this time around as more co-sponsors sign on . It would allow mines already in operation to continue doing their thing, though: a necessary sacrifice to have a better shot at clearing the legislature and landing on Gov. Kathy Hochul’s desk. So while lawmakers are playing catch-up to cryptocurrency miners, miners are racing to get ahead of a moratorium. That’s why Greenidge, even with air pollution permits in limbo, has looked to expand its operations.

Meanwhile, as the regulatory process muddles along, the community around Seneca Lake has been developing its own vision for what to do with the region’s natural resources. And it looks a lot different than digitally panning for gold.

Part three: A different future

The sun rises over grapevines on Seneca Lake’s western shore. Photo: Brian Kahn/Protocol

The first grapevines planted for wine plunged their roots into the Finger Lakes’ soil nearly 200 years ago. The region’s wineries have proliferated in recent decades to take advantage of the microclimates that dot the hillsides. While the area is known for riesling, an ideal grape for cooler climates, numerous other varietals can take hold and thrive in the soils blessed by ice and water.

“There are not many places in the U.S. where you can make this kind of wine,” said Rick Rainey, the founder of Forge Cellars, “and it's a very special region because of that.”

Rainey looks the part of a winery owner, his curly brown locks tumbling to his shoulders and his neck wrapped in an owl-print scarf. He sits in the tasting room that’s often empty during the winter season. But come summer, it will once again be bustling with oenophiles and newbies alike, swirling glasses and holding them to the sunlight to watch wines’ legs crawl down the sides.

Forge is just one of more than 140 vineyards located throughout the Finger Lakes, part of New York’s wine industry that brings in more than $6 billion annually. Grapevines are seemingly everywhere, their spindly branches clinging to wires strung between poles in neat rows that tumble toward Seneca Lake. Wineries inviting you to have a taste or two (or three) ring both sides of the lake, creating a scene Rainey says could parallel the great wine regions of Germany or France.

The bitcoin mine at Greenidge would certainly destroy some of the region’s aesthetic allure, but Rainey also said he worries about the other impacts of the operation expanding. He likened the power plant’s growth to buying a Jetsons-esque new car, only to have it roll up on stone wheels fit for Fred Flintstone. “There are no efficiencies,” he said of the use of methane gas and proof of work. “I just wonder, is [crypto] going to be considered one of the great[est] scams ever?”

Rick Rainey, the co-founder of Forge Cellars, stands amid barrels at his winery. Rainey is among the cohort of locals opposing the bitcoin mine at Greenidge. Photo: Brian Kahn/Protocol

Ken Campbell shares some of the same worries. He and his wife own a house in Dresden, with the Greenidge facility — and its endless tendrils of steam puffing from its smokestacks — visible from their back porch. Campbell is a semi-retired teacher who still works at the local community college, and he plays guitar and sings at local wineries and hotels on the side. (His voice is a dead ringer for Tom Petty’s.)

“There's something on a biological level to be close to a body of water like this that I think regenerates your spirit and helps your outlook on life,” he told me as we sat at his kitchen island. I took in the lake just over his shoulder, where tiny squalls peppered the opposite shore in snow, and felt inclined to agree. It’s a sight to behold, though not one that inspires too many thoughts of recreation.

But come summer, when the ice is long gone and the birds chirp in the trees overhead, the lake truly comes alive. As the weather improves, Forge’s tasting room fills up. The town of Watkins Glen turns into a hub for visitors to its eponymous state park, where water continues its endless sculpting process, tumbling over 19 waterfalls as it cuts a spectacular gorge through the shale and other sedimentary rock.

The prospect of an 85-gigawatt mining operation in the area by the end of this year has Campbell on edge. He says he’s already noticed changes on the lake. Greenidge is allowed to suck 139 million gallons of water up every day that the gas-fired plant uses to create steam and turn the turbine. That water is then dumped back in the lake at temperatures up to 108 degrees Fahrenheit . Campbell stresses that it’s only anecdotal, but that the fish he used to catch right off his dock with his grandkids each summer — during the family’s annual “Tubeapalooza” gathering — have disappeared.

While Campbell said he would, of course, like to continue to enjoy Seneca Lake as he knew it when he first fell in love with its waters, he’s also thinking about the future he passes on to those kids. There are many things that go into building a community, but the core is building something durable that connects future generations with the past. The plant at Greenidge would eat away at that prospect for Campbell, slowly sapping the lake of its ability to bring people physically together.

“We'd hate to see it unnecessarily harmed,” he said. “And there really is no necessity here. None, other than greed.”

Part four: The fight for the future

With Kelles’ bill gathering steam in the legislature and the DEC set to rule on air pollution permits by the end of this month, the state will soon draw a line in the sand and set important precedent. Even if Kelles’ bill passes and Greenidge’s pollution permits aren’t renewed, though, it won’t mean the end of crypto mining on Seneca Lakes shores, let alone the end of mining elsewhere or the growth of interest in cryptocurrency.

Greenidge has already set up a nascent vertically integrated bitcoin mine in Spartanburg, South Carolina, with plans to build out the facility even further. Bitcoin-mining operations are also proliferating elsewhere in the U.S., from Texas to Montana. And New York Mayor Eric Adams has embraced the industry, if not the mining aspects of it, and even took his first paycheck in bitcoin . In short, the fight in the Finger Lakes won’t be the end of crypto mining as we know it.

But the community taking a stand against it could be a template for other places looking to block bitcoin from taking over their towns. “I’ll steal a quote from Sandra Steingraber, a former Ithaca College biologist, who used to say, ‘We're all part of an orchestra: You just have to pick your instrument and play it,’” Taylor said.

When I asked her what role she played, she paused for a second and cocked her head just a bit. “We are conductors,” she said. “We know how to network and bring people together.”

The pier at Watkins Glen, New York, stretching out into Seneca Lake. Photo: Brian Kahn/Protocol