Environmental Group Sues New York for Approving Cryptocurrency Facility | New York

Environmental activists filed a lawsuit Friday against a New York state agency for approving a cryptocurrency mining company’s takeover of an out-of-state power plant.

The group said the move violates the state’s landmark 2019 climate law, and the lawsuit is the first to test how energy-intensive cryptocurrency production legally opposes the state’s climate goals.

In September, New York’s Public Service Commission (PSC), which oversees and regulates utilities, gave the green light to Canadian cryptocurrency company Digihost’s takeover of the Fortistar power plant in North Tonawanda, a town near Niagara Falls.

The Sierra Club, represented by the Clean Air Coalition of Western New York and the nonprofit Earthjustice, argued in a filing in Albany County Superior Court that the PSC’s approval of the transfer violated the state’s broad climate law, the Climate Guide and the Climate Leadership. Community Protection Act of 2019 (CLCPA).

The act sets ambitious goals for the state, including 70% of the state’s renewable electricity generation by 2030, zero-emissions electricity by 2040, and 85% of statewide emissions reductions by 2050 puts

Clean Air and the Sierra Club said in their lawsuits that the Fortistar plant is used as a “peaking” plant that would operate 10 to 74 days a year, only when electricity is in high demand, such as during cold winters and hot summers. According to court documents, as a cryptocurrency manufacturing plant, the facility would operate 24/7 and produce up to 3,000% more greenhouse emissions.

The groups argue that the CLCPA broadly requires the state to conduct environmental studies when making approvals and decisions that ultimately ensure the state meets its climate goals. According to the lawsuit, the PSC “refused to consider the CLCPA and its requirements” when going through the approval process, which began in April 2021.

In addition to increased greenhouse gas emissions, the groups argue that several communities around the Fortistar plant have been designated as possible “disadvantaged communities” under state climate law, meaning residents bear greater environmental burdens and are deprived of historic investments.

The law “requires all government agencies, including [commission] – consider greenhouse gas emissions and impacts on disadvantaged communities when considering administrative permits and decisions,” the lawsuit says. “If such action threatens CLCPA’s greenhouse gas reduction mandates, it cannot proceed without justification.”

In response to environmental concerns brought to the PSC by Clear Air and the Sierra Club during the approval process, Digihost said it will convert the facility to renewable natural gas with the goal of using all hydrogen by the end of 2023. to public documents. The company also told the commission that its mining facility has been approved by the North Tonawanda planning commission, which has conducted its own environmental review.

Cryptocurrency, like Bitcoin, requires a lot of energy. If Bitcoin mining were its own country, it would rank 36th in annual electricity consumption, according to the Cambridge Bitcoin Electricity Consumption Index, which tracks electricity consumption used to mine Bitcoin.

In 2021, the United States became the largest center for mining after China, once the center of cryptocurrency, banned it. Companies flocked to states with cheap electricity and large power plants, including New York, Texas and Kentucky.

While other states have been more welcoming to the cryptocurrency industry, state officials in New York have recently blocked the growth of mining, citing the state’s climate change goals.

In June, mining company Greenidge Generation, which had taken over an out-of-state power plant, was denied renewal of its key air permit by the state’s Department of Environmental Protection, citing the CLCPA as the driving force behind its decision. Greenidge is currently fighting a permit denial and is still operating.

In November, Governor Cathy Hochul imposed a two-year moratorium on new cryptocurrency transactions using fossil fuels in the state. Digihost’s takeover of the plant comes before the bill is signed, exempting it from the moratorium.

In signing the bill, Hochul said it was a “major step for New York as we work to address the global climate crisis.”

Cryptocurrency advocates say miners help bring jobs and economic activity to rural areas, but critics say job creation is negligible. Mining advocates also argue that crypto mining is unfairly singled out for the state’s electricity use, and that miners are likely to leave for more industry-friendly states.

“To date, no other industry in the state has been so marginalized in terms of energy use. This is a dangerous precedent for determining who can or cannot use the power,” the Digital Chamber of Commerce, an advocacy group, said in a statement on the moratorium’s passage.

The lawsuit also comes at a tumultuous time for the cryptocurrency industry following the collapse of FTX, once one of the largest cryptocurrency exchanges, in the fall. After the collapse of the company, the price of Bitcoin fell below $16,000, and many miners’ assets were drastically reduced.

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