Allegations of environmental damages are leading to a legal battle.
Save Carbon County, a grassroots organization, and Freiwald Law sued Stronghold Digital Mining, along with Governor Josh Shapiro, on March 26 on allegations of environmental pollution and claiming tax credits.
They argue Stronghold and its subsidiary, Panther Creek Electric Generating Facility, pollute the environment with the Shapiro Administration’s support. Stronghold received over $20 million in renewable energy tax credits from the state last year, according to the lawsuit.
Freiwald attorney Zack Feinberg said Stronghold illegitimately received those credits. Panther Creek burns waste coal to generate electricity for its crypto mining operations.
“The regulations do say that the tax credits must be generated for retail customers. Meaning for people other than the companies that were generating the power,” said Feinberg.
Cryptocurrency for environmental reclamation
Stronghold CEO Greg Beard said the plaintiff lied. He said the plant in Nesquehoning regularly gives electricity to the grid. His public relations consultant emailed that the plant “supplied power…for 259 days between January 1, 2023, and November 13, 2023.” They did not say how many times, the duration or the amount of electricity they provided.
Beard said his crypto model seamlessly supports the grid. If it needs Panther Creek’s full electricity, the plant shuts off its computers. He argued crypto mining makes his plant more efficient than other plants that occasionally support the grid.
“So, I think the fact that we have a Bitcoin mine that can emulate a battery in terms of its responsiveness, the net impact of that is more grid stability and lower consumer pricing than you would have if you actually had to install a giant grid-scale battery,” said Beard.
Panther Creek burns waste coal to generate electricity for crypto mining. It takes a lot of energy. Computers race against each other to solve block chains, which are lines of code. They “guess” the code to solve the block and get more Bitcoin. Stronghold’s yearly electric use is equal to that of 1.15 million homes per year, according to the lawsuit. That data comes from the U.S. Environmental Protection Agency (EPA).
Beard said Stronghold counters its energy use by using ash to reclaim abandoned coal piles. He pointed to a coal pile less than 15 miles from the power plant.
“What comes off of this pile when it rains? It’s equivalent to battery acid. That’s why rivers that should run clear, run red in many parts of Pennsylvania,” said Beard. “It’s related to – it’s the legacy of coal mining and having a waste on the surface above the water table. So, that’s something like 5,000 miles of streams that are impacted by it [in Pennsylvania].”
He argued that coal piles cannot be returned underground as most mines are abandoned. Beard criticized the plaintiff, Save Carbon County, and any environmental organization that recently questioned Stronghold.
“Clearly there are groups that are calling themselves environmental groups that aren’t really looking out for the global environment or local communities that are using this as an easy target to raise money for themselves,” said Beard.
Inconsistent environmental violations
The lawsuit demands for Stronghold to pay monetary damages to nearby residents. Freiwald Law cites Stronghold’s current emissions at Panther Creek, which are four times the amount of emissions at Panther Creek pre-2021, before Stronghold acquired the property. That data also comes from the EPA.
Panther Creek received 18 environmental safety violations since Stronghold took over in 2021. 17 of those violations are for air pollution. That data comes from the state’s Department of Environmental Protection (DEP)eFACTS website.
However, Stronghold only lists eight violations on a recent DEP permit application. Panther Creek currently burns waste coal, but wants to add tire burning to the mix. The permit would allow it to use tire-derived fuel (TDF) to supplement 15 percent of its monthly electricity use by weight.
Stronghold filed that application in June 2023, but it includes violations that date back to 2018. Panther Creek’s manager David Hawk said Olympus Power LLC owned Panther Creek during that time.
“So, regardless of who owns the plant, the permit applies to the plant. The fact that it was sold in the interim, really doesn’t impact the RFD that was in place. That was granted to the plant, not to any particular owner,” said Hawk.
The RFD or Request for Determination was part of a temporary permit for Panther Creek to test tire-burning.
However, Olympus owned part of Stronghold. Olympus and Q Power LLC are Stronghold’s legacy owners. Stronghold’s CEO Greg Beard also runs Q Power along with William Spence, according to the U.S. Securities and Exchange Commission (SEC).
Beard and Spence state in Q Power’s filings that its “principal business…is to hold investments.” They started Stronghold to invest in a “crypto asset mining company currently focused on mining Bitcoin,” according to the SEC.
Beard said Panther Creek may have more violations than other similar facilities as its emissions are checked on an hourly basis.
“At Panther Creek, we hold ourselves to some of the highest standards within the industry and strive to meet them consistently. Our facility is unique in that it is assessed on an hourly basis, requiring any inconsistencies to be corrected within that hour to prevent them from escalating into violations,” said Beard. “This is in contrast to other plants, which are typically assessed on a 24-hour basis. We have zero ongoing violations, and we work diligently to correct any inconsistencies quickly and effectively."
The DEP refused to answer questions on inconsistencies in Stronghold’s violations reporting or whether Panther Creek is held to a higher standard than similar power plants, after months of attempted contact. DEP spokesperson Colleen Connolly recently said she could not provide comment as the DEP is a defendant in the case against Stronghold.
The lawsuit names Panther Creek, Stronghold, Shapiro, the Pennsylvania Department of Environmental Protection, Interim DEP Secretary Jessica Shirley, the PA Public Utility Commission and the Commonwealth as defendants.
