At dusk, the Seneca Lake boathouse. Getty Images | John Greim | LightRocket Boating, fishing, swimming, and wine tasting are all popular summer activities on Seneca Lake, the largest of the Finger Lakes in upstate New York. This season, though, many residents of this idyllic region are taking up a new cause: protesting a gas-fired power station that they claim is contaminating the air and heating the lake. “You feel like you’re in a hot spa because the lake is so warm,” said Abi Buddington of Dresden, who lives near the plant. Greenidge Generation LLC operates the facility on the banks of Seneca Lake, which is owned by the private equity firm Atlas Holdings. They have increased the electrical power production at the gas-fired plant in the last year and a half, and they are using much of the fossil-fuel energy for the energy-intensive “mining” of bitcoins rather than keeping the lights on in the neighboring towns. Bitcoin is a cryptocurrency, which means it’s a digital form of money that doesn’t include physical banknotes or coins. Mining it, a method of obtaining it, necessitates the use of large high-performance computers. By confirming bitcoin transactions that occur on the internet all over the world, computers receive little bitcoin incentives. The arithmetic necessary to validate transactions and earn bitcoins is becoming increasingly difficult, requiring more and more computer power. Greenidge’s computers run 24 hours a day, consuming a staggering amount of real energy and emitting real pollutants while collecting virtual wealth. NBC News has more. Global bitcoin miners use more energy in a year than Chile, according to a University of Cambridge assessment. When fossil fuels are used to generate energy, the process can result in considerable carbon emissions. The Greenidge facility currently houses at least 8,000 computers and plans to add more, implying that it will need to burn even more natural gas to generate more energy. Atlas is a private equity business that buys companies with debt and hopes to sell them for a profit later. They are covert operations with difficult-to-trace investments. In recent years, the number of such organizations has increased substantially, and they now manage $5 trillion for pension funds, insurance companies, university endowments, and affluent individuals. According to Preqin, a private equity database, private equity firms have invested about $2 trillion in energy over the last ten years. According to Preqin, about $1.2 trillion has been invested in conventional energy, such as refineries, pipelines, and fossil-fuel facilities, compared to $732 billion in renewables, such as solar and wind power. As a result of investor backlash, some public businesses are selling their fossil fuel assets to private equity groups. For example, in 2019, investment firm Kohlberg, Kravis & Roberts, or KKR, bought a majority stake in the troubled Coastal GasLink Pipeline project in British Columbia, a 400-mile fracking gas pipeline that has drawn citations from a regulator and protests from First Nations people whose land it crosses. The project failed to comply on 16 of 17 items assessed, according to a report released last October by the Environmental Assessment Office, a provincial department. As a result, Coastal GasLink has been required to appoint an independent auditor to oversee its work in order to prevent polluting streams and harming fish caused by site runoff. Because private equity firms plan to hold their assets for only a few years, they frequently keep fossil-fuel operations alive that would otherwise be shut down, according to Tyson Slocum, head of Public Citizen’s energy program. “Private equity believes it can wring a few more years out of them,” Slocum added. “They’re also frequently immune to investor pressures.” For example, Boston-based private equity firm ArcLight Capital Partners purchased Limetree Bay, an oil refinery and storage facility in St. Croix, US Virgin Islands, in 2016. After a series of harmful spills, the company went bankrupt, but it reopened in February. After releasing petroleum rain on adjacent neighborhoods, it was shut down just three months later. According to a person briefed on the subject, ArcLight, which has spent $23 billion since 2001, gave over operational control of Limetree Bay early last year and exited in a reorganization in April, right before the disaster. ArcLight “takes its duties to safeguard the environment and help local communities seriously,” according to a spokesman, and “will continue to strive to reach the highest standards.” According to Alyssa Giachino of the Private Equity Stakeholder Project, a nonprofit organization that studies the industry’s impact on communities, because private equity firms are secretive, its investors may not know what they own or the dangers they face. She believes that pension funds and their beneficiaries may have more fossil fuel exposure than they think, and that they may not be fully aware of the hazards. She cited negative consequences for people of color, the danger of lawsuit and environmental penalties, and long-term climatic repercussions as examples. On behalf of endowments, state pensions, and other institutional investors, KKR is a major energy investor. KKR, like many of its private equity peers, has invested significantly more in traditional energy projects such as the Coastal GasLink Pipeline than in renewables. According to a recent estimate by Giachino, KKR invested $13.4 billion in conventional energy assets between 2010 and 2020, compared to $4.9 billion in renewables. In correspondence, KKR did not dispute those figures. KKR is “dedicated to investing in a stable energy transition, one that supports a change to a clean energy future while acknowledging the ongoing necessity of supplying the conventional energy needed for well-being and economic progress around the world today,” according to a spokeswoman for the firm. Stakeholders are informed on the company’s investment strategy, progress, and goals, according to the company. A team focused on energy transition investments in North America was recently added to KKR. According to Clark Williams-Derry, an energy economist at the Institute for Energy Economics and Financial Analysis, private equity investors often “leave behind disasters for someone else to clear up.” “When the private equity business comes in and tries to strip mine the company and the people for whatever they’re worth,” he continued, “the real issue begins.” Greenidge, the Atlas-owned operator of the Seneca Lake power station, disagrees, according to Jeff Kirt, the company’s CEO. He stated, “The plant’s environmental impact has never been better than it is right now.” According to a company-commissioned report, the lakeside facility is functioning within its federal and state environmental permits and has produced 31 employment. The potential profits of cryptocurrencies, according to Williams-Derry, add to the appeal of purchasing low-cost, carbon-intensive power facilities. While natural gas-fired plants, such as Greenidge in New York, aren’t as polluting as coal-fired plants, they nevertheless emit harmful greenhouse gases, he added. Greenidge researched ways to gain larger returns on its extra energy after taking over the plant, according to Kirt. Bitcoin mining was a gold mine for it. It mined 1,186 bitcoins at a cost of around $2,869 each in the year that ended Feb. 28, according to the firm. Bitcoin is currently trading at roughly $34,000, despite its frantic gyrations. ‘It’s a terrible business plan,’ says the author. The private equity group Atlas, which owns Greenidge, is on a roll. It raised $3 billion from investors lately, bringing its total assets to $6 billion. Atlas has investments in 23 businesses, two of which are power generators: Greenidge Power in New York and Granite Shore Power in New Hampshire. The 150-acre coal-fired Greenidge plant was purchased by Atlas in 2014, three years after it had decommissioned. The nearly 80-year-old plant was converted to natural gas and commenced operations in 2017, supplying energy to the grid only during peak demand periods. Greenidge began mining bitcoin with the machine in 2019 and boosted its output. It still feeds excess power into the local grid, but much of the energy it generates is currently used for bitcoin mining. According to corporate filings, it has ambitions to expand at Greenidge and elsewhere. Greenidge unveiled a new bitcoin mining business this week inside an Atlas-owned disused printing plant in Spartanburg, South Carolina. Greenidge announced in March that its 19 megawatt Bitcoin mining capacity would increase to 45 megawatts by December and may reach 500 megawatts by 2025 if its concept is replicated elsewhere. The capacity of larger gas-fired plants in the United States ranges from 1,500 to 3,500 megawatts. Greenidge also announced a merger with Support.com, a struggling tech support company whose stock is traded on the Nasdaq. Atlas will get ownership of the merged firm and access to public investor funds as part of the acquisition, which is slated to completion in the third quarter of this year. According to a regulatory filing, Atlas founder Andrew Bursky owns half to three-quarters of the company. Atlas and Bursky declined to comment for this piece. “These crypto operations are seeking for somewhere with reasonably inexpensive power in a relatively cool climate,” said Yvonne Taylor, vice president of Seneca Lake Guardian, a conservation advocacy group. “It’s a bad business model for the entire state of New York, the United States, and the world.” Greenidge, which disagrees, said this month that it would soon be carbon neutral in its activities. It is purchasing credits from a variety of US greenhouse gas reduction schemes to offset the plant’s emissions. Judith Enck, a senior fellow and visiting faculty member at Bennington College in Vermont and a former regional administrator for the Environmental Protection Agency, has reservations. “Carbon offsets are not a very effective approach to meet greenhouse gas reduction objectives,” she wrote in an email, “and there is no structure in place to govern it in New York.” According to detractors, one reason bitcoin mining is perceived as a threat to the environment is that new power plant operators may continue to use peat./n
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