Violation at a Pennsylvania drilling site raises questions about lack of Bitcoin regulation
A gas and oil company mining for cryptocurrency in Elk County, Pennsylvania, was found to be in violation of state regulations when it installed equipment before getting approval from the state Department of Environmental Protection, but the company says it is following the rules.
A March 1 DEP inspection at Diversified Gas and Oil's Jay Township site found the company had put in place tools for cryptocurrency operations. The company does have a General Permit. But, according to the DEP, Diversified did not have a permit to install the air pollution sources used to generate power for crypto mining. That specific permit is currently under review.
A DEP spokesman said the violation might result in an enforcement action.
The inspection report notes equipment that was at the Longhorn C pad site, including four natural gas microturbines to make electricity along with two trailers with equipment for cryptocurrency. An engine, generator and oil tank were also there, but were not in operation. The DEP spokesman said the department could not confirm if the cryptocurrency equipment was installed and operating before March 1.
Diversified, headquartered in Alabama, is reportedly the biggest oil and gas well owner in the country. A statement from a company spokesman said Diversified is complying with state rules.
"We believe operations at the Longhorn C pad are permitted and also operating through exemptions with the Department of Environmental Protection, and that we are in compliance with the requirements," the statement says.
Crypto mining has been growing in Pennsylvania, raising questions about oversight.
Jay Township supervisors had written to DEP earlier this year, saying they were getting complaints about the noise coming from the site. Residents near other crypto-mining sites in Pennsylvania have made similar complaints. When reached for comment, a supervisor said the company had addressed the township's concerns and the site was quieter now.
Three environmental organizations, PennFuture, Clean Air Council and Earthjustice, submitted comments asking the DEP to deny or withdraw approval of Diversified’s plan. Their letter points to the company's previous violations in Pennsylvania — operating without valid authorization at 19 locations — that are listed in a DEP filing.
Rob Altenburg, director of the PennFuture Energy Center, said the bitcoin mining industry is not highly regulated.
"If we’re seeing a whole lot of violations at a company, it certainly does raise questions: Are they prioritizing public health and environmental protection in their operations," Altenburg said.
Bitcoin, a type of cryptocurrency, currently has a price of about $30,000. Bitcoin mining uses computer systems to solve complex problems, in an effort to do it more quickly than other miners and get rewarded with a coin. But, those supercomputers use a lot of energy.
"Across the whole Bitcoin network, it uses about as much energy as the state of New York — more than many entire countries," Altenburg said.
Altenburg said he and others are trying to raise awareness at the state and federal level.
“There’s this problem here, and it’s bad now," he said. "There’s pollution happening now, but it has the potential to get worse.”