An invisible force is reshaping the landscape of Dresden, a quiet village nestled by the sparkling waters of Seneca Lake. No, it’s not a new eco-tourism initiative or solar farm — it’s cryptocurrency mining, a digital gold rush that promises economic growth but carries a heavy environmental price tag.
Bitcoin (BTC) is a decentralized digital currency created in 2008 by the pseudonymous Satoshi Nakamoto, an elusive person (or group) that has never been definitively identified. Bitcoin operates without a central authority, such as a government or bank. Instead, it uses blockchain technology — a secure, transparent and public ledger that records all transactions.
Bitcoin transactions are verified through a process called mining, where powerful computers called ASICs (Application-Specific Integrated Circuits) solve complex mathematical problems to validate transactions and add them to the blockchain. This process ensures that Bitcoin is not double-spent and remains secure. Interested in buying an ASIC? Prices range from $6,000 to $12,000 for new models.
Bitcoins can be used for online purchases, investments or as a store of value. The supply of Bitcoin is capped at 21 million, which gives it a scarcity similar to precious metals like gold. What wasn’t clear in the beginning was the immense energy demand behind the mining process.
Mining for digital currencies has become highly competitive and energy-intensive. For communities like Dresden, the revitalization of Greenidge Generation — a natural gas plant now powering a Bitcoin mining operation — has sparked fierce debates over the balance between economic growth and environmental responsibility.
Miners like Greenidge process transactions, create new “blocks” every 10 minutes, and earn a 6.25 BTC reward plus transaction fees, profiting by continuously securing the network and earning digital assets. The process, known as proof-of-work, demands enormous amounts of electricity — more than 15 megawatts, enough to power thousands of homes.
According to the U.S. Energy Information Administration, mining for digital assets consumes 2.3% of all U.S. electrical demand, equivalent to the annual consumption of Argentina. By 2030, this figure is projected to rise to 8%, and Upstate New York has become a hub for such operations.
While the plant’s operators argue that mining will revive the local economy in Dresden and the region, environmental advocates point out that its reliance on natural gas contradicts New York State’s ambitious goals to decarbonize. The Climate Leadership and Community Protection Act, signed into law in 2019, aims to reduce emissions to 40% below 1990 levels by 2030 and 85% by 2050.
Greenidge’s continued use of fossil fuels undermines these goals, increasing emissions and air pollution. The plant sources its natural gas from pipelines that bring the fuel from the Marcellus Shale region, primarily located in Pennsylvania, one of the largest sources of natural gas in the United States.
In addition to emissions, the plant’s massive water consumption raises concerns about the health of Seneca Lake. According to New York State Department of Environmental Conservation (DEC) records, Greenidge withdraws up to 139 million gallons of water daily from the lake for cooling, discharging it back at temperatures as high as 108°F. These hot water discharges may be contributing to harmful algae blooms that threaten aquatic ecosystems and recreational activities on the lake.
“The northwest quadrant of Seneca Lake, where Greenidge is located, had the highest incidence of harmful algae blooms last summer,” said Yvonne Taylor, founder of Seneca Lake Guardian, a NYS nonprofit dedicated to preserving and protecting the health of the Finger Lakes.
And as climate change exacerbates rising water temperatures, Taylor points out that the problem is likely to worsen.
“This is not just a New York State or Finger Lakes issue,” she said. “Communities across the country are dealing with the same problems — air, noise, and water pollution — and it’s time to have a national conversation about the true cost of crypto mining.”
Taylor, who has deep family roots in the region, continued.
“This land is the only constant I’ve ever known,” she said. “To see a predatory corporation exploit our air and water like this is personal.”
The rapid global growth of the cryptocurrency industry has fueled debates about sustainability. Environmentalists have long raised alarms about crypto’s carbon footprint, especially in areas where operations rely on fossil fuels. Greenidge’s use of natural gas in New York, a state committed to clean energy, is viewed by many as “greenwashing” — the practice of giving a false impression of environmental responsibility.
Cristiano Bellavitis, a Syracuse University professor specializing in entrepreneurship, has warned about the volatility of cryptocurrency mining operations.
“The market for digital assets swings wildly,” he said. “When the market crashes, these operations often scale back or shut down, leaving behind empty buildings and unmet local obligations.”
For a small community like Dresden, this could mean the loss of jobs, tax revenue and damage to local businesses that have come to rely on the plant. Bill Roege, president of Seneca Lake Pure Waters Association, echoed these concerns.
“The local community benefit from Greenidge is very small,” he said. “The company reaps the rewards, not the community. The extra local taxes raised by the operation are negligible. There are a few jobs, but this doesn’t employ many people. Tourism, which is a big industry here, is hurt by it.”
Across the globe, some Bitcoin mining operations have sought to reduce their environmental impact. For instance, Genesis Mining, one of the largest globally, moved much of its business to Iceland and Sweden, where it uses renewable hydroelectric and geothermal energy. Riot Platforms in Texas has integrated wind power into its operations. But in places like Dresden, where the transition to renewable energy is still in its infancy, reliance on natural gas remains the easiest option for keeping operations running.
“It would be better for them to use renewable energy, but increasing demand for cryptocurrency could raise the price of solar panels and wind turbines, which would hurt everyone else,” Roege said.
New York has made efforts to address the environmental toll. In 2022, Gov. Kathy Hochul signed a two-year moratorium on new fossil fuel-powered mining projects, making the state the first in the U.S. to take such action. The moratorium targets new operations, but Greenidge has been grandfathered in, leaving advocates and residents like Taylor and Roege feeling the state’s actions are insufficient.
The DEC initially denied Greenidge’s Title V air permit renewal in 2022. That decision has been upheld three times by state courts, but Greenidge has continued operations while appealing against each ruling. The company has argued that the DEC doesn’t have the authority to deny air permits based on climate standard guidelines and that the facility is 100% carbon neutral due to the purchase of carbon offsets. (The effectiveness and transparency of such offsets are often questioned by environmental groups.)
For now, the plant continues with business as usual. The future of both cryptocurrency and Seneca Lake hangs in the balance, and it’s clear that the clock is ticking.
As the global demand for digital currencies continues to grow, it raises the fundamental question: Is this digital economy sustainable, or are we allowing it to compromise our planet’s future for a fleeting promise of financial prosperity? The question of whether mining operations like Greenidge’s are sustainable — or simply a digital energy vampire — has never been more urgent. greenidge.com
George Payne is a contributor to CITY.
This article appears in Dec 1-31, 2024.
