Coal image: diddi4, CC0, via Wikimedia Commons

New York State Cracks Down on Bitcoin Miners Buying Old Coal Plants

Essay by Eric Worrall

As ordinary people suffer electricity blackouts and price hikes, Bitcoin miners have been restarting unwanted old coal plants, to produce the vast quantities of cheap, reliable energy needed to mint new bitcoins.

New York cracks down on carbon fuel-based crypto-mining operations

Two-year ban comes as state attempts to reduce emissions by 85%

Richard Currie
Wed 23 Nov 2022  // 17:01 UTC

New York State has banned a practice becoming more common in the crypto-mining industry – the rescuing and repurposing of mothballed fossil fuel plants to exclusively provide energy for mining digital currency.

Governor Kathy Hochul yesterday enacted a bill in the works since May 2021 that establishes a two-year moratorium on applications or permits for “an electricity generating facility that utilizes a carbon-based fuel and that provides, in whole or in part, behind-the-meter electric energy consumed or utilized by cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions.” This includes applications to renew such permits.

The bill cites the contribution to climate change of dirty fuel plants at a time when the state has committed to reduce greenhouse gas emissions by 85 percent by 2050, with “net zero emissions in all sectors of the economy by that time.”

Though it notes that the industry is growing in New York, the bill says: “The continued and expanded operation of cryptocurrency mining operations running proof-of-work authentication methods to validate blockchain transactions will greatly increase the amount of energy usage in the state of New York, and impact compliance with the Climate Leadership and Community Protection Act.”

Read more: https://www.theregister.com/2022/11/23/new_york_crypto_mining_ban/

I love this story, because it makes a complete mockery of claims coal is too expensive or unreliable.

Bitcoin mining, despite the glamour, is a marginal business. Making a profit requires a gargantuan supply of reliable but very cheap energy.

To “mine” bitcoin, mining computers must provide “Proof of work”, the solution to a difficult cryptographic math puzzle. The puzzle is not mathematically complex, the difficulty is the trillions of attempts which are required to find the missing key, to create a valid solution – kindof like brute force code breaking with a computer, trying different keys until you find one which works. Each solution cryptographically secures not only the latest transactions, but all previous transactions, so solving these difficult equations helps secure the bitcoin ledger against tampering and theft. The difficulty of solving the puzzle, and lots of independent copies of the ledger, creates a near insurmountable impediment to tampering with past transactions. People who contribute to the Bitcoin community by helping to secure the ledger of transactions against tampering, by solving these immensely difficult “proof of work” cryptographic puzzles, are rewarded with newly minted bitcoins.

The specialised computers required to solve this cryptographic puzzle and find the missing key in a reasonable time are expensive, but the real killer cost is the cost of the electricity required to run those expensive computers.

US Bitcoin mining until recently was falling behind China, because Americans pay a lot more for energy than the Chinese. But Chinese authorities discovered rich citizens were using Bitcoin to circumvent strict Chinese currency controls, shipping their money electronically out of the country, beyond the reach of the Communist Party. To suggest they were less than amused would be an understatement. This discovery triggered a harsh Chinese crackdown on cryptocurrencies, which put a big dent in Chinese bitcoin mining.

Bitcoin miners needed a new source of cheap energy, and fast.

They found their energy source – mothballed US coal plants. Punitive environmental laws passed by green energy obsessed US politicians to shut down coal plants only applied to coal plants supplying the grid. Bitcoin miners don’t want to supply the grid, they want to supply their bitcoin mining computers, so the miners started taking advantage of this loophole in environmental laws, by restarting the coal plants, but using all the electricity produced by those coal plants to run onsite bitcoin mining computers.

This must have caused immense embarrassment to green politicians, who are trying to convince voters to accept price hikes and coal plant closures. Imagine the political blowback if, after watching coal plants being forced to close, voters suffering a mid-winter green energy blackout saw their local coal plant operating full blast, to power bitcoin mining rigs instead of supplying heat and electricity to their homes.

Now New York State has followed the footsteps of the Chinese Communist Party, and moved to shut down this embarrassing contradiction to their green energy narratives, by attempting to make sure those mothballed coal plants stay shut down.

4.9 31 votes
Article Rating
Subscribe
Notify of
42 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
abolition man
November 23, 2022 10:58 pm

What a delicious irony! I had to look at the calendar to make sure it was Thanksgiving, not April Fool’s Day! The US “Green” politicians will soon be working hand-in-glove with the CCP to prevent this heresy from occurring! In Jobama Biden’s case it will be hand-in-; well, never mind!

strativarius
Reply to  abolition man
November 24, 2022 1:37 am

World Economic Forum chair Klaus Schwab declares on Chinese state TV: ‘China is a model for many nations’ – Fox news

michael hart
Reply to  abolition man
November 24, 2022 7:36 am

I am still of the opinion that your initial thought may be right, abolition man.

The general story about the energy costs of bitcoin mining leaves me unconvinced.
Where are the CPUs that use whole power stations of electricity? The effect of my computer is not measurable compared to the tumble dryer or taking a hot shower.

What is the name of any bitcoin -mining company consuming power stations worth of electricity? Anyone?
Did this company have to have special grid extensions built?

This whole thing strikes me as a typical ‘the common cold costs us a gazillion Dollars a day’ argument.

michael hart
Reply to  michael hart
November 24, 2022 8:19 am

Yes, I have now read the links below. Not sure the numbers add up in the real world of continuously operating and maintaining a power station.

I am still unconvinced about it being a genuine way of profiting from electricity generation in a legal manner. Eric’s description of mafia-like money laundering is more convincing.

Writing Observer
Reply to  michael hart
November 24, 2022 8:32 am

I have a moderately powerful rig here – a mid-range GPU (graphics processing unit) to render graphics on occasion. I don’t do that very often, so it runs about 500 watts normally.

A digital coinage “mine” is nothing like mine. They’ll have a half-dozen high-end GPUs running flat out in each “rack” – and a hundred or more racks in the mine. With having to cool the building they’re in, an easy two or three megawatts per mine. Cluster ten or more “mines” around the plant, and you’ll use the output of one generation unit.

The other reason, of course, is that you can’t get that kind of power from the grid without a very expensive build-out to your “mines.” The capital costs are probably about equivalent – and you don’t have to wait years for the local electric company to make the connection (assuming the regulators allow it, which they aren’t in New York).

Drake
Reply to  Writing Observer
November 25, 2022 8:47 am

Sounds like the expenses of MaryJane grow houses using grow lights.

Are the same people that used to do that when MJ was illegal now doing Bit coin mining?

Duker
November 23, 2022 11:05 pm

Not wanted in New York. No problem they could just move to say….Montana where they have coal mines still.
This is 115MW plant is Hardin , southern Montana.

https://www.theguardian.com/technology/2022/feb/18/bitcoin-miners-revive-fossil-fuel-plant-co2-emissions-soared
Who knew that the Guardian could provide useful information

Mr Ed
Reply to  Duker
November 24, 2022 4:46 pm

Here’s another MT bitcoin project story in MT.

https://mtstandard.com/news/local/giant-solar-project-proposed-in-south-butte-landowners-concerned/article_653a61a1-d565-5f21-9639-0052f3df86e7.html

I wonder if they will remove the snow in the winter.

Drake
Reply to  Duker
November 25, 2022 8:53 am

Now that there is FUNNY, I don’t care who you are!

Geoffrey Williams
November 24, 2022 12:14 am

Oh yes, what goes around, comes around . .

Nick Graves
Reply to  Geoffrey Williams
November 24, 2022 12:49 am

Since a BTC mining rig is rather a cost-effective way of heating a room (when it ‘wins’) I’m now musing about some sort of Indian tangle-wiring style rig”

“No overlords, we’re not connected to the grid. We’re providing district heating”.

Curious George
Reply to  Nick Graves
November 24, 2022 7:51 am

That confirms stories about a lot of bitcoin mining happening in Iceland.

Writing Observer
Reply to  Nick Graves
November 24, 2022 8:34 am

Unless it gets below freezing outside, I don’t heat my home office. And I have only a moderately powerful rig. One mid-range GPU that I use to render graphics on occasion.

doonman
November 24, 2022 12:45 am

Now New York State has followed the footsteps of the Chinese Communist Party

Why is this a surprise to anyone?

If New York can ban coal used to generate private electricity, then they can ban any fuel at anytime. That ought to bother New Yorkers who own generators.

Last edited 6 days ago by doonman
cognog2
November 24, 2022 1:00 am

Sounds like great news; but perhaps not. These Greenie politicians will probably write the legislation so that it can be used to put you in prison for putting a fresh log on the fire.

peteturbo
November 24, 2022 1:16 am

sorry, is that article from babylon bee?
i refuse to believe you could go to all the trouble and expertise of opening a power station just to run computers.
if it is true then bitcoin needs to be shut down as the simplest and best way to address reducing co2.

lanceflake
Reply to  Eric Worrall
November 24, 2022 6:37 am

Eric nailed the argument why crypto will never replace money. Add to that the fact that it is being shown to be the con-job/tulip-mania it always was and it’s obvious that it should be shut down. Nothing to do with CO2.

Scarecrow Repair
Reply to  lanceflake
November 24, 2022 7:03 am

Yes, your argument has nothing to do with CO2, but it has everything to do with you knowing better than everyone else what is good for everyone else. You hide behind the skirts of “the greater good” while actually being a selfish Karen control freak.

Interesting that you show your true Puritan colors on the Pilgrims’ Thanksgiving, a day you no doubt hate.

johnlocke
Reply to  Scarecrow Repair
November 24, 2022 8:17 am

I say let them go ahead and mine their bitcoin. It’s going down the toilet now anyway. Let people continue throwing good money after bad as bit coin continues to die off like any other Ponzi scheme.

Scarecrow Repair
Reply to  johnlocke
November 24, 2022 8:33 am

Exactly. Their investment, their risk.

ATheoK
Reply to  Scarecrow Repair
November 25, 2022 6:54 am

“but it has everything to do with you knowing better than everyone else what is good for everyone else. You hide behind the skirts of “the greater good” while actually being a selfish Karen control freak.

Interesting that you show your true Puritan colors on the Pilgrims’ Thanksgiving, a day you no doubt hate.”

So many gross insults from so little information.
A classic case of projection.
You, make many assumptions about and blaming someone else, based upon your own selfish inadequacy.

AndyHce
Reply to  lanceflake
November 24, 2022 1:31 pm

You should first compare bitcoin mining energy usage to that of the banking industry, which involves almost completely the same kind of “money” — 0s and 1s in computers, no physical substance — except that the banking industry “money” is completely controllable by government, i.e. produce a low social score and you can be financially eliminated in an instant.

David A
Reply to  AndyHce
November 25, 2022 8:19 pm

Should not one then compare that amount of transactions? And by that I mean transactions in the real economy where real business is conducted. What percentage of all monetary transactions on every level is bitcoin involved in? It is vanishingly small, and therefore the energy cost per utility is sky high.

Scarecrow Repair
Reply to  peteturbo
November 24, 2022 6:58 am

Or you could just mind your own business and leave people alone who are leaving you alone.

Don’t try to pretend you are saving the planet. Prices are the great equalizer, and the fact they can generate cheaper coal power than your beloved unreliables, even with all the biased laws, tells anyone with a brain that they are doing more to help everyone else than you are.

John in Oz
Reply to  peteturbo
November 24, 2022 3:00 pm

“I refuse to believe” – open your eyes. A quick search for ‘bitcoin mining facility’ gives:

https://www.coindesk.com/business/2021/11/11/bitfarms-buys-24mw-crypto-mining-facility-in-washington-state-for-26m/
Canadian bitcoin miner Bitfarms (BITF) has bought a 24 megawatt (MW) hydropower plant in Washington state that is expected to add 620 petahash (PH/s) of mining power

https://www.gem.wiki/Whinstone_Bitcoin_mining_facility
It has a current capacity of 400 megawatts (MW) and construction is underway to expand to its full planned capacity of 750 MW
The site will ultimately boast 240,000 acres of floor space and will utilize immersion cooled Bitcoin mining machines

https://www.coindesk.com/markets/2020/08/21/bitcoin-mining-facility-with-room-for-50000-rigs-set-to-launch-in-kazakhstan/
The facility would handle as much electricity as needed to power 180,000 U.S. homes
The center will get its electricity straight from the Kazakhstani grid, which itself will source the power from a local coal-fired station. Ivanov said it was the cheapest source of power available

SteveG
November 24, 2022 1:50 am

Forget bitcoin…What about my new ROLEX WATCH! — European energy debacle — ROLEX manufacturing cut by 50%…The global elite will need to wait even longer now for their new Oyster Perpetual….

Screenshot_20221020-172830_Brave.jpg.70c2fcdc1be2dfa42814bdb995cdc685.jpg
ATheoK
Reply to  SteveG
November 25, 2022 6:59 am

Self satisfaction and virtue signaling at the expense of their own employees.

Bob Cratchit got at least one lump of coal from Scrooge before Scrooge was enlightened.

Ed Zuiderwijk
November 24, 2022 3:14 am

Won’t happen here in the UK. Decommissioned coal plant are blown up, not mothballed. Under applaus from imbecilic politicians and a clueless press our last defence against power cut is turned to dust. Even the green-crazed Germans have not been so stupid as to burn all the bridges behind them.

Frank from NoVA
November 24, 2022 4:03 am

‘’Bitcoin mining, despite the glamour, is a marginal business.‘

A ‘marginal’ return mining bitcoin would be almost infinitely greater than the hugely negative ‘return on investment’ of implementing Net Zero. The super computers used by the climate alarmists to run their beloved GCMs should be repurposed.

nutmeg
November 24, 2022 4:12 am

The more different ways used to shut down coal, the more enemies they make. The glimmer of hope is that eventually they will hamper someone with the finances and the will to take a case to the Supreme Court.
The other reasonable hope for sanity is that someone in the U. S. successfully sues for election security. As seen in ‘purple’ Florida, once the vote is limited to legal ballots, the party of CAGW loses. Once the U.S. is out, other nations will follow as the economic differences become clear.

Duker
Reply to  nutmeg
November 24, 2022 10:56 am

New York state saw a loss by the democrats of 4 seats in the house election

observa
November 24, 2022 4:50 am

Here in South Oz we’re still just transitioning you understand?
https://www.msn.com/en-au/money/markets/agl-to-close-its-torrens-island-b-gas-power-station-in-south-australia-in-2026-nearly-a-decade-early/ar-AA14tSGz

Yes folks that’s the same Labor mob that bunged in the 9 diesel generators that can consume 80,000 litres of diesel an hour the last time they needed a bit more transitioning. Along with the unicorn Tesla battery at time for the benefit of the dopey tame media of course.

observa
Reply to  observa
November 24, 2022 4:57 am

PS: Here’s why the Great Transmissioners want that link to NSW rather urgently-
https://aemo.com.au/energy-systems/electricity/national-electricity-market-nem/data-nem/data-dashboard-nem

David Dibbell
November 24, 2022 5:54 am

“New York State Cracks Down on Bitcoin Miners Buying Old Coal Plants”
Future headline: “New York State Cracks Down on Ratepayers for Expecting Reliable and Affordable Electricity”

If things keep going on the same track here in NY, the train wreck is already set up for a few years from now. This massive push for heat pumps, EV’s, intermittent solar + wind sources, battery storage, etc. will not end well.

I will most definitely keep my wood stove for the inevitable winter outages.

Lee Riffee
Reply to  David Dibbell
November 24, 2022 9:58 am

Yes, NY is doing its best to drive people out and turn into a third world failed state, not unlike CA. Eventually you will have only the uber-wealthy and the desperately poor and homeless, and nothing in between. People who can pay sky-high electricity rates and afford EVs, and those who can barely keep the lights on and get around in an old beater, if they are lucky.
And unlike much of CA, heating is very necessary in NY. Without gas and oil many people will be SOL and unable to afford paying thru the nose for electric heat.

Captain Climate
November 24, 2022 5:56 am

How is that law constitutional?

doonman
Reply to  Captain Climate
November 24, 2022 12:33 pm

It’s not. Buying coal is not illegal. Buying old coal power plants is not illegal. Generating your own electricity is not illegal. So it’s a restraint of trade. However, passing unconstitutional laws has no risk.

Hivemind
Reply to  Captain Climate
November 24, 2022 9:24 pm

I expect that there’s a law that requires a permit to emit CO2. They’d pass a law that needs you to have a permit for breathing, but that is probably planned for some time in the future.

Ref The Beatle’s “The Taxman”

John the Econ
November 25, 2022 6:55 am

I wouldn’t get too excited. Progressivism will simply demand that coal plants for crypto mining be closed instead of people being allowed to have cheap and reliable energy. “Social Justice”, after all.

Loren Wilson
November 25, 2022 8:17 am

Two thoughts – does the state have the authority to control this one very particular industry? I think there will be lawsuits. Second, they are actually doing the state of new York a favor since the electricity produced can be easily sent to the grid to support it during this coming winter.

auto
Reply to  Loren Wilson
November 25, 2022 11:11 am

Loren,
the electricity produced can be easily sent to the grid to support it during this coming winter.”
It can be sent to the grid –
Agreed.
It WILL be sent to the grid –
Hmmmmm, but won’t that allow some useless eaters to keep warm-ish??
And is that wanted??


Asking for a friend.

Auto

%d bloggers like this: