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.

ArcLight, which has invested $23 billion since it was founded in 2001, gave up operational control of Limetree Bay early last year, a person briefed on the matter said, and it exited in a restructuring in April, just before the accident.

A spokeswoman for ArcLight said the firm "takes its responsibilities to protect the environment and support local communities seriously and will continue to strive to meet the highest standards."

Because private equity firms are secretive, their investors may not know what they own or the risks, said Alyssa Giachino of the Private Equity Stakeholder Project, a nonprofit organization that examines the industry's impact on communities. She said pension funds and their beneficiaries may end up with more fossil fuel exposure than they realize and may not have a full appreciation of the risks. They include heavy impacts on communities of color, risks of litigation and environmental penalties and long-term climate effects, she said.

KKR is a huge energy investor on behalf of endowments, public pensions and other institutional investors. Like many of its private equity brethren, KKR has deployed far more money in conventional energy assets like the Coastal GasLink Pipeline than in renewables.

From 2010 to 2020, KKR invested $13.4 billion in conventional energy assets, compared to $4.9 billion in renewables, according to a recent estimate by Giachino. KKR didn't dispute those figures in emails.

KKR's spokeswoman said the firm is "committed to investing in a stable energy transition, one that supports a shift to a clean energy future while recognizing the ongoing importance of supplying the conventional energy needed for well-being and economic growth around the world today." The company said it communicates its investment approach, progress and goals transparently to stakeholders. KKR recently added a team focused on energy transition investments in North America.

Private equity investors sometimes "leave behind messes for someone else to clean up," said Clark Williams-Derry, energy analyst at the Institute for Energy Economics and Financial Analysis. "The real trouble happens when the private equity firm comes in and is just trying to strip mine the company and the workers for whatever they're worth," he said.

Not so Greenidge, the Atlas-owned operator of the Seneca Lake power plant, said Jeff Kirt, its CEO. "The environmental impact of the plant has never been better than it is right now," he said. The lakeshore facility is operating within its federal and state environmental permits, he said, and it has created 31 jobs, a company-commissioned report shows.

Williams-Derry said cryptocurrency's potential profits add to the appeal of buying low-cost and carbon-intensive power plants. While natural gas-fired plants like Greenidge's in New York aren't as problematic as those that use coal, they still generate damaging greenhouse gases, he said.

Kirt said that after Greenidge took over the plant, it sought ways to earn higher returns on its surplus energy. It struck gold with bitcoin mining. During the 12 months that ended Feb. 28, it mined 1,186 bitcoins at a cost of about $2,869 each, the company said. Bitcoin, which gyrates feverishly, currently trades at around $34,000.

'A horrible business model'

Greenidge's owner, the private equity firm Atlas, is on a roll. It recently raised $3 billion from investors, doubling its assets to $6 billion. Atlas owns stakes in 23 companies; two are power generators — Greenidge in New York and Granite Shore Power in New Hampshire.

Atlas bought the 150-acre coal-fired Greenidge plant in 2014, three years after it had closed. Converted to natural gas, the almost 80-year-old plant began operations in 2017, generating energy to the grid only at times of high demand.

In 2019, Greenidge began using the plant to power bitcoin mining and increased its output. It still supplies surplus power to the local electrical grid, but a lot of the power it generates is now used for bitcoin mining. And it has plans for expansion at Greenidge and elsewhere, company documents show. Last week, Greenidge announced a new bitcoin mining operation at a retired printing plant Atlas owns in Spartanburg, South Carolina.

In March, Greenidge said its Bitcoin mining capacity of 19 megawatts should reach 45 megawatts by December and may ramp to 500 megawatts by 2025 as it replicates its model elsewhere. Larger gas-fired plants in the U.S. have capacities of 1,500 to 3,500 megawatts.

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