Appellate Court Rules In Favor Of NYers Impacted by Polluting Cryptomining Power Plant

NORTH TONAWANDA, NY (03/11/2024) (readMedia)-- Yesterday, the New York Supreme Court, Appellate Division, Third Department issued the attached opinion reversing the dismissal of Clean Air Coalition of Western New York v. NYS Public Service Commission and directing that the case proceed.

In 2022 the Public Service Commission ("PSC") allowed Canadian cryptocurrency company Digihost International to acquire the Fortistar North Tonawanda gas plant in Western New York. Even though Digihost plans to ramp up the gas plant's operations in order to power 24/7 cryptocurrency mining, the PSC failed to do any analysis of the climate and environmental impacts of its decision as required by New York's Climate Leadership and Community Protection Act (CLCPA). Clean Air Coalition of Western New York and the Sierra Club, represented by Earthjustice, filed a lawsuit in Albany against the PSC, and then appealed when the trial court dismissed the case as not yet ready for judicial review.

The appellate court reversed, siding with Clean Air Coalition of Western New York and the Sierra Club, and holding that they filed the action at the correct time. The appellate court also dismissed all of the additional procedural roadblocks that the cryptomining company threw up to try to get the case thrown out. Although the cryptomining company claimed that people who live near the power plant lack "standing" to bring the case, the court recognized that Digihost's purchase of the gas plant could injure the plant's neighbors and gives them the right to challenge the PSC's decision. Additionally, the court rejected the cryptomining company's argument that the case was moot, concluding that the PSC could still act to protect the plant's neighbors.

The case will now go back to the trial court, which was directed to address the substantive legal question presented by the lawsuit: did the PSC violate the CLCPA by allowing Digihost to buy the gas plant without conducting any CLCPA analysis.

"As the appellate court made clear, people who live near polluting power plants have every right to challenge the decisions that impact their health, safety, and quality of life. We look forward to proving that cryptocurrency miners can't get a free pass to pollute, and the Public Service Commission can't ignore the climate and environmental justice impacts of its decisions," said Hillary Aidun, Senior Associate Attorney at Earthjustice.

"We are heartened by this news - we continue to regularly hear complaints from neighboring residents of noise and vibration issues from the cryptocurrency operations at Fortistar, and residents continue to be extremely concerned about the health impacts from poor air quality. The Public Service Commission needs to listen to these residents about their concerns and about the larger need to reduce greenhouse gas emissions by planning for a build out of renewable energy infrastructure paired with a managed phase down of fossil fuel infrastructure to prevent vulture capitalist operations from perpetuating environmental injustices," said Bridge Rauch, Environmental Justice Organizer at Clean Air Coalition of Western New York.

"We are delighted with this reversal and appreciate the Appellate Court's recognition that New York's Climate Law must be taken seriously. The Public Service Commission cannot ignore the impacts of its decisions," said Roger Downs, conservation director for the Sierra Club Atlantic Chapter. "Especially when their orders run counter to public benefit and endanger the air quality for communities already burdened with a disproportionate amount of pollution."

In another recent case of a cryptomining company purchasing a gas plant in New York, the New York Department of Environmental Conservation denied the air permit for Greenidge Generation because the plant's operations violate the CLCPA. Digihost's air permit is also up for review at this time.

About cryptomining at the Digihost/Fortistar gas plant

Digihost/Fortistar previously served as a peaker gas plant, only operating at 0.9% to 4% of its annual capacity over the last five years. In February 2023. The plant was purchased by Digihost, which is planning to ramp up to 24/7/365 operations in order to mine Bitcoin. This will increase the gas plant's pollution substantially – equivalent to 63,170 cars being driven for one year, according to the company's own projections. Methane pollution and local air pollution are also projected to increase.

While the City of North Tonawanda is surrounded by water and wildlife, it already bears the burden of significant pollution. Communities surrounding the gas plant have been designated as "disadvantaged communities" under state law, and include census tracts that the state has assessed as bearing an environmental burden greater than that borne by 90% of the state. The increase in operations from cryptomining at the Digihost/Fortistar gas plant will harm an already environmentally overburdened community, in violation of New York's Climate Leadership and Community Protection Act.

Air pollution isn't the only negative impact of Digihost's operations - residents who live nearby the facility report they can hear its loud hum and feel the vibrations inside their homes, even with all of the windows and doors closed. One resident described the sound as "a jet engine running while you're sitting inside the plane." According to the New York Times, a growing body of research shows that chronic noise is a largely unrecognized health threat that increases the risk of hypertension, stroke, and heart attacks.

On top of creating significant air pollution, there are also water use and discharge concerns. When the Digihost/Fortistar gas plant ramps up to 24/7 operations to mine crypto, it will use and then discharge hundreds of thousands of gallons of hot water into an already-overburdened and aging municipal water system that is in need of major upgrades.

On November 22, 2022, Governor Hochul signed the first-in-the-nation two-year moratorium on new and renewed air permits for fossil-fueled power plants that produce their own energy to mine crypto. The new law requires the DEC perform a full environmental impact assessment on the energy and environmental impacts of crypto mining operations. However, the moratorium did not affect air permit applications that had already been submitted before its enactment, such as Greenidge's and Fortistar's applications. The public comment process for the Environmental Impact Statement required by the moratorium law has begun. Impacted communities and those concerned with CLCPA compliance are looking forward to a robust Environmental Impact Statement from the New York State Department of Environmental Conservation.

In addition, Digihost has been operating on an air permit that expired on November 8, 2021, and its application for permit renewal has been pending for over two years. We look forward to the DEC's decision on this air permit as soon as possible. There's precedent in NYS for the DEC to deny Digihost's air permit. On June 30, 2022, the NYS DEC denied the Title V Air Permit renewal for Greenidge Generation, a cryptomining facility in the Finger Lakes, citing dramatic increase in greenhouse gas emissions.

Background

In its most recent report, the Intergovernmental Panel on Climate Change (IPCC) warned that Earth is likely to cross a critical and dire threshold for global warming within the next decade if we don't quickly and drastically reduce our dependence on fossil fuels. But after China banned proof-of-work crypto-mining (the process Bitcoin uses), citing, among other things, the environmental threats that mining poses to meeting emissions reduction goals, the U.S. is now hosting many energy-intensive proof-of-work crypto-mining operations. While these facilities of automated machines create few new jobs, they threaten the climate, in addition to small businesses, local economies, and natural resources.

Proof-of-work cryptocurrency mining is an energy-intensive process that requires thousands of machines whirring 24/7 to solve complex equations. Each one of these machines requires energy to run, plus more energy for cooling. Globally, Bitcoin mining consumes more energy each year than entire countries.

Earlier this year, the New York Times published an in-depth expose about the negative impacts of proof-of-work Bitcoin mining. In September 2022, the White House sounded the alarm about cryptocurrency mining - the Office of Science and Technology Policy released a report about the industry's climate threats and the need for regulation. But cryptocurrency mining continues to grow rapidly across the country. Earthjustice and the Sierra Club released a Guidebook, finding that in one year from mid-2021 to mid-2022, Bitcoin mining in the U.S. alone consumed as much electricity as four states combined, emitting 27.4 million tons of CO2 - equivalent to the emissions of as much as 6 million cars annually. More highlights from the Guidebook:

• Proof-of-work cryptocurrency mining has grown explosively in the United States since 2020. Today, an estimated 38% of Bitcoin is mined in the U.S.
• From mid-2021 to mid-2022, Bitcoin consumed 36 billion kilowatt-hours of electricity - as much as all of the electricity consumed in Maine, New Hampshire, Vermont, and Rhode Island put together in that same time period.
• The massive energy consumption of cryptocurrency mining threatens to undermine decades of progress toward achieving climate goals and reducing local pollution. In addition, cryptocurrency mining practices raise costs and risks for utilities and their ratepayers, can stress electric grids, and flood communities with noise.
• The cryptocurrency mining industry already uses half the electricity of the entire global banking sector, and it will overtake the sector in two years if current trends continue. Meanwhile, the ratio of Bitcoin's energy consumption to humans who actually have Bitcoin is extremely high.
• Rather than investing in long-term energy infrastructure that benefits the grid, the cryptocurrency mining industry seeks the fastest energy that can serve its needs, and looks for minimal regulation and oversight. In practice, that translates to mining cryptocurrency at coal and gas plants, straining the electric grid in Texas, and tapping into power grids that are often fossil-fuel heavy.

Read the Sierra Club and Earthjustice guidebook here.

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