Allegations of environmental harm have sparked a legal dispute.
On March 26, Save Carbon County, a grassroots organization, and Freiwald Law initiated legal action against Stronghold Digital Mining and Governor Josh Shapiro. The lawsuit accuses them of environmental pollution and improper utilization of tax credits.
The core argument presented by the plaintiffs is that Stronghold, in collaboration with its subsidiary, Panther Creek Electric Generating Facility, is contributing to environmental pollution with the tacit approval of the Shapiro Administration. The lawsuit highlights that Stronghold received over $20 million in renewable energy tax credits from the state in the previous year.
Attorney Zack Feinberg from Freiwald Law contended that Stronghold obtained these tax credits through illegitimate means. He emphasized that the regulations stipulate the tax credits should benefit retail customers rather than the companies generating the power.
Stronghold CEO Greg Beard refuted the allegations, asserting that the plant in Nesquehoning consistently supplies electricity to the grid. He emphasized the plant’s role in providing power for 259 days within a specified timeframe. However, specific details regarding the frequency, duration, and quantity of electricity supplied were not disclosed.
The operational model of Stronghold involves utilizing waste coal to generate electricity for its crypto mining activities. This process entails significant energy consumption, with computers competing to solve block chains for Bitcoin rewards. The lawsuit revealed that Stronghold’s annual electricity consumption is equivalent to that of 1.15 million homes, based on data from the U.S. Environmental Protection Agency (EPA).
Despite the energy-intensive operations, Beard highlighted Stronghold’s efforts to offset its energy consumption by using ash to rehabilitate abandoned coal piles. He drew attention to the environmental impact of coal mining legacies, emphasizing the importance of reclaiming affected land to mitigate ecological damage.
The legal dispute also addresses environmental violations attributed to Stronghold, particularly the significant increase in emissions at Panther Creek post-acquisition. The lawsuit references 18 environmental safety violations, primarily related to air pollution, recorded since Stronghold assumed ownership in 2021, as reported by the state’s Department of Environmental Protection (DEP).
In response to the violations, Stronghold submitted a permit application seeking to incorporate tire burning into its energy generation process. This application, filed in June 2023, includes historical violations dating back to 2018. Panther Creek’s manager, David Hawk, clarified that the permit applies to the plant regardless of ownership changes.
The lawsuit further implicates Stronghold’s previous owners, Olympus Power LLC, and Q Power LLC, highlighting Beard’s involvement in both entities as per the U.S. Securities and Exchange Commission (SEC) filings. Beard and his associates established Stronghold to invest in cryptocurrency mining activities, focusing on Bitcoin extraction.
Beard defended Panther Creek’s operational standards, emphasizing the stringent hourly monitoring of emissions to ensure compliance with industry regulations. He underscored the plant’s commitment to rectifying any inconsistencies promptly to prevent violations.
Despite attempts to seek clarification from the DEP regarding Stronghold’s compliance and monitoring standards, the department declined to comment, citing its involvement as a defendant in the ongoing legal proceedings against Stronghold.
The lawsuit encompasses multiple defendants, including Panther Creek, Stronghold, Governor Shapiro, the Pennsylvania Department of Environmental Protection, Interim DEP Secretary Jessica Shirley, the PA Public Utility Commission, and the Commonwealth.