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Stronghold Digital Mining has raised $105 million to set up bitcoin mining at Scrubgrass, a 90MW power plant in Venango County, Pennsylvania, which burns super-dirty coal waste
The Scrubgrass plant and pollution is owned by Stronghold Digital Mining, which describes itself as an “ESG-friendly” (environmental, social and governance friendly) crypto-mining firm – arguing that burning the waste coal enables it to clean up contaminated sites. Investors in the firm include MG Capital, and Stronghold CEO and chairman Greg Beard. Stronghold has said that the electricity generated at Scrubgrass would be uneconomical without the on-site crypto-mining data center it plans to build.
Bitcoin enables a rather dirty clean up
Coal has been mined in Pennsylvania since the 19th century, and there is more than 450 million tons of waste coal in heaps around the west of the state. These piles create acid runoff which contaminates ground and surface water – and they are also prone to catching fire.
Scrubgrass opened in 1993, burning the coal waste to make electricity. In the 1990s, efficient fluidized bed combustion began to make energy from waste materials and other “difficult” fuels economic, and there are now 12 such “co-generation” plants in Pennsylvania.
They burn coal waste (called “gob” or “bony”) which is dug from huge surface heaps. However, their emissions are much worse than conventional coal plants and the rise of renewables has undermined their economic advantage. The Environmental Protection Agency (EPA) is on the case of cogeneration plants, and in 2020 allowed them a limited reprieve to continue operating. Most only work seasonally when the price of electricity is high, according to E&E News.
Stronghold says it can keep Scrubgrass running continually, by handing the power cheaply to its on-site bitcoin mining facility: “Our ownership of the Scrubgrass Plant combined with the environmental benefits which accrue to the region allow us to mine bitcoin at what we believe to be some of the lowest costs in the industry while making a transformational contribution to the environment,” said Beard in a statement.
“Without bitcoin, we would be unable to do the work that we’re doing,” Stronghold co-chairman Bill Spence said in an interview with the Pittsburgh Business Times.
Scrubgrass appears to be part-owned by Olympus Power which bought 30 percent of the project in 2014. On its site, Olympus argues it creates environmental benefits by burning the bituminous coal refuse (GOB) left over from decades of coal mining in the region, while also cleaning and landscaping former refuse sites: “Scrubgrass provides a unique and profound environmental benefit by consuming coal from mining activities as well as abandoned coal refuse piles. As a consequence, mining sites can be reclaimed and restored to usable land.”
According to Quartz, EPA figures show that the plant produced 241 GWh of energy in 2019, while producing more than 400,000 tonnes of CO2. That works out at 1.67 tonnes of greenhouse gas per MWh of energy, while the US average for regular coal is 1.1 tonnes of GHG per MWh. Global Energy Monitor says a Clean Air Task Force report found that particulates from Scrubgrass kill around seven people per year – and they also produce high levels of mercury and acid gases such as hydrogen fluoride.
Tougher emissions rules in the Obama era would have closed down coal waste burning plants like Scrubgrass, but Quartz reports the plants dodged those rules by a questionable move – classifying themselves as mining operations to gain four years’ exemption. Under the Trump administration, EPA rules were loosened again and the plants could continue.
With Bitcoin mining keeping the flames burning, Stronghold plans to continue to expand, and could take on 200MW of power capacity.
DCD contacted Stronghold to clarify the power plant’s ownership, and get more detail on its environmental claims.
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