Summer on Seneca Lake, the largest of the Finger Lakes in upstate New York, is usually a time of boating, fishing, swimming and wine tasting. But for many residents of this bucolic region, there’s a new activity this season — protesting a gas-fired power plant that they say is polluting the air and heating the lake.
“The lake is so warm you feel like you’re in a hot tub,” said Abi Buddington of Dresden, whose house is near the plant.
The facility on the shores of Seneca Lake is owned by the private equity firm Atlas Holdings and operated by Greenidge Generation LLC. They have increased the electrical power output at the gas-fired plant in the past year and a half and use much of the fossil-fuel energy not to keep the lights on in surrounding towns but for the energy-intensive “mining” of bitcoins.
Bitcoin is a cryptocurrency — a digital form of money with no actual bills or coins. “Mining” it, a way of earning it, requires massive high-performance computers. The computers earn small rewards of bitcoin by verifying transactions in the currency that occur on the internet around the world. The math required to verify the transactions and earn bitcoins gets more complex all the time and demands more and more computer power. At Greenidge, the computers operate 24/7, burning through an astounding amount of real energy, and producing real pollution, while collecting virtual currency.
An estimate from the University of Cambridge says global bitcoin miners use more energy in a year than Chile. When the energy comes from fossil fuels, the process can add significantly to carbon emissions. The Greenidge plant houses at least 8,000 computers and is looking to install more, meaning it will have to burn even more natural gas to produce more energy.
Private equity firms like Atlas buy companies, often using debt, and hope to sell them later at a profit. They are secretive operations with investments that can be hard to track. The number of such firms has grown significantly in recent years, and they oversee $5 trillion for pension funds, insurance companies, university endowments and wealthy people.
In the past 10 years, private equity firms have poured almost $2 trillion into energy investments, according to Preqin, a private equity database. About $1.2 trillion has gone into conventional energy investments, such as refineries, pipelines and fossil-fuel plants, compared to $732 billion in renewables like solar and wind power, Preqin said.
As investor criticism prompts some public companies to dump fossil fuel assets, private equity firms are ready buyers. In 2019, for example, powerhouse Kohlberg, Kravis & Roberts, or KKR, acquired a majority stake in the troubled Coastal GasLink Pipeline project, a 400-mile fracking gas pipeline in British Columbia that has drawn citations from a regulator and protests from First Nations people whose land it crosses.
In a report last fall, the Environmental Assessment Office, a provincial agency, said the project failed to comply on 16 of 17 items inspected. As a result, Coastal GasLink was ordered to hire an independent auditor to monitor its work to prevent site runoff that can pollute streams and harm fish.
Because private equity firms expect to hold their investments for only a few years, they often keep alive fossil-fuel operations that would otherwise be mothballed, said Tyson Slocum, director of the energy program at Public Citizen, a nonprofit consumer advocacy group. “Private equity thinks it can squeeze a couple more years out of them,” Slocum said. “And they are often immune from investor pressures.”
In 2016, for instance, the private equity firm ArcLight Capital Partners of Boston bought into Limetree Bay, an oil refinery and storage facility in St. Croix in the U.S. Virgin Islands. The operation had gone bankrupt after a series of toxic spills, but it reopened in February. Just three months later, it was shuttered after it unleashed petroleum rain on nearby neighborhoods.