See how this American company turns excess electricity into treasure

New York’s Finger Lakes region is a beautiful place known for its wine and glacier-formed waterways, but now it’s home to one of the largest bitcoin mining facilities in the United States.

Greenidge Generation is a former coal-fired power plant that has converted to natural gas, and they provide electricity to residents in New York State. Greenidge must win bids every day in the competitive electricity market, and they make a profit when the demand for energy is high.

The company has been in business since 1937, but in the last decade, it suffered from cheap power and the plant was mothballed in March 2011. Cheap shale gas supplies and Chinese competition for coal exports put the old company in financial trouble. Atlas Holdings bought the plant in 2014 and converted it to natural gas in 2017.

Atlas, which acquired and transformed struggling industrial companies, helped the company transition to a more efficient energy model, but margins were always tight. It was in 2018 that CEO Dale Irwin and CFO Tim Rainey had the idea to use excess capacity to mine Bitcoin.

It’s a unique idea in the U.S., Rainey said: “ Cryptocurrency mining evolved after discussions with the board and leadership team as we explored the best ways to leverage the unique assets we have at our facility, and the board approved plans to proceed with bitcoin mining.”

Dale Irwin stated: “We started with a few S9s and some GPU miners in early 2018 to familiarize ourselves with the economics of the machines and learn how to operate and run them, and we did a small test with hundreds of machines in May 2019. After completing the test pilot and conducting analysis, we built the current data center in four months and started large-scale mining operations in January 2020.” They currently operate 8,500 latest generation miners from Bitmain and other manufacturers.

Greenidge is using more than 20 megawatts (MW) of electricity to mine Bitcoin, making it the largest energy company in the United States to employ such a strategy. In comparison, 20MW is not very large, with larger Bitcoin mining facilities in other countries. Bitcoin's Electricity Consumption Index shows that global electricity consumption is estimated at 7.25 gigawatts (GW), of which 71% is in China.

Greenidge is looking to increase its energy consumption and the company plans to use the plant's total capacity to 104MW next year.

Mining Bitcoin and cryptocurrencies is an energy-intensive enterprise, with some arguing that it is a waste of energy and that digital assets are a pure drain on the environment.

But the company describes itself as a hybrid power plant and mine, where greater value can be generated, being able to power New York's grid or mine cryptocurrencies, choosing one or the other depending on the profitability of the day. Dale continued: "Without crypto mining, it would be economically impossible for us to provide capacity and energy to the national grid year-round and continue to provide jobs to the local community, which provides the majority of our workforce."

This model is unique because mining Bitcoin is not a trend in the power industry. If there are other power companies in a similar situation, is this a sustainable way to increase revenue?

“Without mining operations we would not be running most of the time, but if we were running non-stop year-round we would generate revenue of about $20/MWh,” said Tim Rainey. “Bitcoin mining revenue with the latest generation of hardware ranges from $70/MWh to over $200/MWh depending on price, global hash rate, and difficulty.”

Time will tell, but Rainey did add: “We can generate over $500,000 in additional revenue in a matter of hours that we otherwise would not have been able to send online. Additionally, we are unique in that they are all highly skilled engineers, electricians and other technicians on site running the power plant 24/7 who also help operate and maintain the mining hardware.” ( Blockchain Knights)