Sabin Center @ Columbia White Paper Makes the Legal Case for Gov. Hochul to Pause Permits for Cryptomining

ALBANY, NY (03/21/2022) (readMedia)-- On Monday, Columbia Law School's Sabin Center for Climate Change Law published a new white paper, A Pause on Proof-Of-Work: The New York State Executive Branch's Authority to Enact a Moratorium on the Permitting of Consolidated Proof of Work Cryptocurrency Mining Facilities. The paper analyzes the legal authority of Governor Hochul to impose a moratorium on issuing air permits for proof-of-work crypto mining (which Bitcoin uses), and concludes that the executive branch has the authority to do so. Environmental advocates, including Seneca Lake Guardian, EarthJustice, Sierra Club, the Natural Resources Defense Council, NYPIRG, and Food & Water Watch, endorsed the report and urged the DEC to immediately act by denying the air permit renewal application of Greenidge Generation, a converted peaker plant operating as a 24/7 Bitcoin mine in the Finger Lakes. DEC is expected to make a decision about the permits on or before March 31st. According to the Sabin Center, the state is in a strong legal position to put a pause on air permits for fossil fuel-burning cryptomining plants and withstand any legal challenges.

The paper gives new momentum to months of advocacy from elected officials, environmental advocates, and local business owners across the state who've been calling on Governor Hochul to impose a moratorium on Bitcoin mining. New York now hosts 20% of the U.S.'s Bitcoin mining to the detriment of small businesses, local economies, the environment, and the climate.

The DEC has already confirmed that cryptomining is a threat to New York's energy goals as outlined in the CLCPA. In a story published in Albany Times Union this morning, referring specifically to Greenidge, the Department of Environmental Conservation cast doubts about continuing operations:

"Greenidge 'has not demonstrated that the project is consistent with the attainment of statewide greenhouse gas emission limits established in the Climate Act.' The agency said that Greenidge has not yet shown how the operation would not hinder the goals of reducing greenhouse gas emissions."

Read the white paper here. A PDF of the paper is also attached, and a summary is below.

Watch the press conference with advocates and the paper's authors here.

"We need Governor Hochul to impose a moratorium and protect New Yorkers from climate-killing Bitcoin mining, which she is entirely within her legal authority to do. In the Finger Lakes and across the state, outside speculators are invading our communities to destroy our natural resources, kneecap local businesses, and keep us from meeting the crucial climate goals outlined by the CLCPA," said Joseph Campbell, president of Seneca Lake Guardian. "Repowering or expanding coal and gas plants to make fake money in the middle of a climate crisis is literally insane. We deserve sane energy policy made by leaders who understand that regulation should be to save lives, not enable dangerous currencies favored by authoritarian states and criminals."

Summary of Findings

Drawing on precedent established in 2010 when the executive branch signed the fracking moratorium, the new white paper describes the Governor's authority to stop new proof-of-work cryptomining operations, such as Greenidge Generation, by enacting a moratorium on the permitting of these facilities. DEC already has the authority to hold off on issuing new permits for facilities like these until a thorough Generic Environmental Impact Statement (GEIS) has been conducted.

When the fracking moratorium was established in 2010, the executive order directed the DEC to revise an existing GEIS and pause all permitting in the meantime, pointing to the fact that the State Environmental Quality Review Act (SEQRA) prevents issuing permits prior to the completion of a GEIS. That moratorium was later extended, and an indefinite ban was eventually imposed. Similarly, because of the increasing environmental impacts of Bitcoin mining, "there is a strong argument for DEC to develop a GEIS to study mining's environmental effects," the paper says.

A moratorium and a GEIS would support pausing new permits and permit renewals for cryptomining facilities pending the development of a GEIS. Even though permit renewals are typically exempt from the need for an environmental impact statement under the Environmental Conservation Law and DEC regulations, in the case of Greenidge, which had a material change in operations from a peaker plant to a 24/7 Bitcoin mining operation resulting in an exponential increase in greenhouse gas emissions, issuing a GEIS would be supported. The paper adds "In the case of applications for permit renewals for newly-converted consolidated mining operations like Greenidge, there are strong arguments for DEC's authority to treat those applications as applications for new permits that require the development of a new EIS."

Additionally, new grounds for a moratorium have been developed since 2010 under the Climate Leadership and Community protection Act (CLCPA). As the paper states, DEC has previously relied on section 7(2) of the CLCPA, which broadly gives state agencies the authority to consider whether a permit, license, or other decision would interfere with attaining statewide greenhouse gas emissions goals. The CLCPA itself and several supporting documents "suggest that the CLCPA grants the executive branch authority to deny permits for consolidated mining operations due to their climate impacts." Greenidge's greenhouse gas emissions are exponentially increasing as it expands its Bitcoin mining capacity, which continues to interfere with statewide emissions goals.

The paper later describes possible challenges to a moratorium, but they would not "carry particularly strong legal weight." Legal challenges to the fracking ban in state and federal court were dismissed, and "a moratorium on permitting of consolidated mining operations would likely pass constitutional muster."

Because a moratorium like this would be unlikely to reach mining facilities that, unlike Greenidge, draw all of their power from the grid, the paper concludes by suggesting policy considerations to bridge the gap. The paper suggests the State Legislature could pass new legislation that would require all mining facilities to be permitted by DEC or another state agency, and require that permits follow the CLCPA's greenhouse gas emission limits.

"Governor Hochul must protect the Climate Act from the death of a thousand cuts, like converting power plants to cryptomining operations. She has the legal authority to do so, and in the middle of a climate crisis we can't afford to drain our energy supply with electricity-hogging proof-of-work cryptomining that could take our climate past the point of no return," said Russ Haven, General Counsel of NYPIRG.

Liz Moran, New York Policy Advocate for Earthjustice, said, "The expansion of proof-of-work cryptocurrency mining in New York stands to jeopardize New York's ability to meet its climate mandates and would harm communities. New York can't play whack-a-mole with this industry – Governor Hochul must deny the permit for the Greenidge Facility and issue a statewide moratorium on these energy hogging cryptocurrency mining practices until a thorough environmental review is conducted. Thanks to the thoughtful review of the Sabin Center, we now know a moratorium has a legal pathway forward."

"Governor Hochul has the power to stop climate-killing Bitcoin mining, she has the strength of New York's climate movement at her back, and she has only moments left to act," said Food & Water Watch Senior New York Organizer Eric Weltman. "Every day that we await action from Albany is another day that profiteering Bitcoin miners can set up shop in our communities, repowering shuttered fracked gas plants to power their dirty operations. There is no time to wait - Governor Hochul must enact a moratorium on Bitcoin mining now."

"The original Title V air permit for the Greenidge fracked gas plant was issued without any mention or analysis of Bitcoin mining or the environmental impacts that come with such operations. This needs to be reconsidered and remedied through DEC's air permit renewal process," said Roger Downs, conservation director for the Sierra Club Atlantic Chapter. "If the gap in regulation for behind-the-meter Proof of work cryptocurrency operations is not closed by Governor Hochul, this kind of digital partnership could soon be an integral part of every power plant operating in NY – which could profoundly derail state's ability to comply with our climate goals."

Background

Proof-of-work cryptocurrency mining (which Bitcoin uses) is an extremely energy-intensive process that requires thousands of machines whirring 24/7 to solve complex equations. The more machines that are running, the faster a coin is mined. Each one of these machines requires energy to run, plus more energy to run cooling technology. Globally, proof-of-work Bitcoin mining uses the same amount of energy each year as the entire country of Argentina. It produces 30,700 metric tons of e-waste each year, comparable to the yearly IT equipment waste of the Netherlands. If left unregulated, the industry will wreak irrevocable harm on the entire state of New York, making it impossible to reach New York's crucial climate goals as outlined in the Climate Leadership and Community Protection Act (CLCPA). The CLCPA commits to an 85% reduction in greenhouse gases by 2050 and 100% zero-emission electricity by 2040.

Powering Bitcoin mining with renewables is not a viable solution, as renewables supply cannot possibly meet the extreme energy demands of Bitcoin mining in addition to daily necessities such as heating and cooling homes and running cars. Any renewable energy that supports Bitcoin mining is renewable energy that is being diverted from the public grid. And when crypto miners rely on the public grid, they stick everyday New Yorkers with the bill. A 2021 study estimates "the power demands of cryptocurrency mining operations in upstate New York push up annual electric bills by about $165 million for small businesses and $79 million for individuals.

Cryptomining is also at odds with the overwhelmingly popular amendment to the state constitution passed last year, which guarantees every New Yorker the right to clean air, clean water, and a healthful environment. Revitalizing old polluting power plants for private financial gain, with drastic consequences for our air, water and climate, all while causing huge amounts of noise pollution, is now unconstitutional - and ought to be treated as such.

Reform groups Common Cause/NY and NYPIRG have specifically criticized the crypto mining industry for exploiting public resources and straining the energy grid for private gain, and a group of federal lawmakers led by Senator Elizabeth Warren recently requested details from six major Bitcoin mining companies about their electricity usage and contributions to climate change. Earlier this month, President Biden issued an executive order requiring federal agencies study the legal, economic, and environmental impacts of cryptocurrencies, including Bitcoin mining. Even the Mayor of New York City, Eric Adams, an avid crypto booster has come out against mining, declaring at a February 9th joint session of the Legislature: "I support cryptocurrency, not crypto mining."

Greenidge Generation is the test case for the issue of Bitcoin mining in New York.

Located on the shores of Seneca Lake, Greenidge is a once-mothballed power plant that has been converted into a bitcoin mine by the private equity firm that owns it. Greenidge operates over 17,000 Bitcoin mining machines and is expanding to over 32,500, pumping dirty fossil fuels into the air 24/7. This will lead to over one million tons of CO2 emissions each year, equal to that of 100,000 homes. Greenidge also sucks 139 million gallons of water each day from Seneca Lake and dumps it back in at 108 degrees, risking toxic algal blooms that make this water source for 100,000 people non-potable. The plant brings very few new jobs to the region while poisoning the air and natural resources the local $3 billion agritourism economy relies on.

The DEC's decision on Greenidge's air permit renewal was expected by January 31, but it was pushed back two months, allowing it to continue harming the community and expanding its operations. A decision is now expected in the coming weeks, by March 31.

More than 1,000 organizations, businesses, environmental activists, concerned residents, wine makers, elected officials, and more have taken action over the last year in opposition to crypto mining in New York State. In letters to Governor Cuomo last year opposing Greenidge Generation's expansion from an emergency peaker plant to a 24/7 Bitcoin mining operation, organizations, businesses, and Finger Lakes residents demanded Gov. Cuomo revoke Greenidge's permits due to its massive greenhouse gas emissions, poisoning of the Finger Lakes, and noise pollution, with no economic benefit to the community. Greenidge Generation is still operating in Dresden, NY under grandfathered-in permits granted for use as a peaker plant, not 24/7 Bitcoin mining. Greenidge has applied for an air permit renewal and is awaiting a decision from the Department of Environmental Conservation. Similar fights have occurred in Plattsburgh and Niagara Falls, which resulted in local moratoriums.

Legislation (A7389B/S6486C) to place a 3 year moratorium on Bitcoin mining in New York State is picking up steam in the Assembly with 41 co-sponsors including 15 senior-ranking Assembly committee chairs as of February 24.

About Seneca Lake Guardian

Seneca Lake Guardian is a New York State Not-for-Profit Corporation with 501(c)(3) and is dedicated to preserving and protecting the health of the Finger Lakes, its residents and visitors, its rural community character, and its agricultural and tourist related businesses through public education, citizen participation, engagement with decision makers, and networking with like-minded organizations.

Posted Monday March 21, 2022 at 11:08 am by Seneca Lake Guardian
Last Updated Monday March 21, 2022 at 05:05 pm