New York state sees a manufacturing boom: Producing Bitcoin

Abandoned plants, few rules have created hub for cryptocurrency, but environmental groups pushing for regulation

A bitcoin mining operation is opening northeast of Niagara Falls this month on the site of the last working coal plant in the state of New York.

Across the state, a former aluminum plant in Massena, already one of the biggest cryptocurrency sites in the United States, is expanding.

And in Owego, a metal-recycling mogul with 11.3 million Instagram followers is making a gritty startup with banks of computers in shipping containers next to a scrapyard.

Soaring Bitcoin values may be the investment talk of Wall Street, but a few hours north, in upstate New York, the buzz is about companies that are scrambling to create the digital currency by “mining” it virtually with all types and sizes of computer farms constantly whizzing through transactions.

In just a few years, a swath of northern and western New York has become one of the biggest Bitcoin producers in the country. The prospectors in this digital gold rush need lots of cheap electricity to run thousands of energy-guzzling computer rigs.

The area — with its cheap hydroelectric power and abundance of shuttered power plants and old factories — was ripe for Bitcoin mining. The abandoned infrastructure, often with existing connections to the power grid, can readily be converted for Bitcoin mining.

The companies say they are boosting local economies by bringing industry back and creating a crypto vanguard north of New York City, where Bitcoin stock, though unpredictable, hit record highs on Wall Street this year and which the incoming mayor, Eric Adams, envisions as a cryptocurrency hub.

But the surge of activity has also prompted a growing outcry over the amount of electricity and pollution involved in mining for Bitcoin. Globally, cryptocurrency mining is said to consume more electricity annually than all of Argentina. China, once home to perhaps two-thirds of all crypto mining, banned the practice this year to help achieve its carbon-reduction goals, driving some miners to New York.

As a result, environmental groups say, the Wild West-style scramble, coupled with a lack of restrictions on Bitcoin mining, is threatening the state’s own emission-reduction goals, which call for more renewable power and rapid reductions in fossil-fuel emissions.

Bitcoin mining companies often require only basic building or planning permits from local governments, many of them faded industrial towns eager for any new business-tax revenue they can generate.

In the Finger Lakes region, a former coal plant on pristine Seneca Lake has been converted into the Greenidge Generation natural gas-burning plant, which now powers Bitcoin mining on site. Near Buffalo, a Bitcoin company is seeking cheaper electricity by taking over a part-time gas-fired power plant and revving it up for round-the-clock use.

The resulting uptick in greenhouse gas emissions will hasten the impact of climate change, say environmental groups such as Earthjustice and the Sierra Club, which are monitoring the upstate New York’s many old natural-gas plants that could be readily repurposed as Bitcoin mining operations.

Plants that buy renewable energy from the grid have also drawn complaints. Since a large Bitcoin mining plant can use more electricity than most cities in the state, environmentalists warn that crypto mining will leave other areas dependent on fossil fuel power.