Crypto mine comes to Indiana and major polluting coal plant stays open

A pollution-spewing power plant in western Indiana that was set to close this year is getting a reprieve after being purchased by a coal company and landing a new energy-guzzling neighbor hoping to cash in on the international cryptocurrency boom.

The idea of using a fuel source that is millions of years old to power the futuristic technology is not only ironic, it’s troubling to environmental and consumer advocates. They worry the two facilities, and the dirty power behind them, will leave Hoosiers at risk of continued pollution — and potentially higher electricity bills.

The exact nature of the relationship between the Meron Generating Station’s new owner and AboutBit, the private company planning an adjacent crypto “mining” facility, is unclear. And officials aren’t talking.

While the questions in Indiana now are focused on the coal-fired powerplant near Merom, a town of about 200 residents located 30 miles south of Terre Haute, it’s part of a larger national debate about coal, aging power plants and crypto mining.

Cryptomining is booming across the U.S., spurred in part by a 2021 decision in China to ban the practice. Looking for a soft place to land, with little regulatory oversight and cheap electricity to power massive computer centers turned to the U.S. Some are locating near coal and natural gas plants that were to be retired soon, while others are setting up business directly on the grounds of power plants.

Indiana’s Merom Generating Station, along the state’s western border, is a 40-year-old coal-fired plant. Its retirement was announced in 2020, with the plant slated to go offline in 2023. Then in 2022, that course was reversed. The utility that owned Merom sold the plant to a coal company to continue operating. In the meantime, a cryptomining company announced it was coming to town and would need a lot of power.

AboutBit, a Kentucky-based cryptocurrency start-up, said it would develop a state-of-the-art mining facility in Indiana that would be one of the largest in the nation. And it’s being built on the same property as the Merom coal plant.

Despite the location, AboutBit told IndyStar the crypto facility has nothing to do with the coal plant staying open. That and other contradictory statements from the crypto company have only created more confusion and suspicion.

Amidst the uncertainty, advocates say they have serious concerns. The plant is currently under construction but its opening date is “to be determined.”

“I would be extremely skeptical of their claims unless and until they can provide you with documentation backing them up,” said Ben Inskeep, program director of Citizens Action Coalition, a consumer advocacy group. “Their refusal to do so and their complete lack of transparency is a big red flag. It raises more questions than answers. What are they hiding?”

Hoosier Energy, a rural electric cooperative utility serving Hoosiers, announced in 2020 that it was going to retire the Merom Generating Station — one of 14 coal plants still operating in Indiana. At that time the utility said shutting down the decades-old coal plant “provides a substantial savings” versus keeping it open. 

But in 2022, the utility announced it would sell the Merom coal plant to Hallador Power Company, a subsidiary of coal-mining company Hallador Energy. Hallador operates coal mines in Indiana and last year reopened two mines in concert with acquiring the coal plant. 

As part of the announcement, Hoosier Energy also announced it would buy power produced at Merom from Hallador. 

“It feels very odd that they would find it’s no longer wise to operate and said they need to retire it and get more economical power,” Inskeep said, “and then they turn around and sell it and buy the power from it.” 

In a statement to IndyStar, Hoosier Energy said it and its member cooperatives “benefit significantly” from the transfer of Merom to Hallador and the current power purchase agreement. Hallador did not respond to multiple requests for comment. 

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What Inskeep said he finds even more odd, however, is a new customer in the Hoosier Energy service territory. 

Just months after the coal plant’s retirement was reversed, AboutBit announced it would open a large cryptomining facility on the same site as the Merom power plant. The crypto facility will use thousands of computers to verify and track crypto currency transactions. The facility also will have an intensive cooling system to keep the computers from overheating. 

Perhaps unsurprisingly, this facility has serious power needs. Previous statements issued about the project have mentioned 115 megawatts of power. If the facility were to operate 24/7, which many do, it would consume the equivalent power of nearly 84,000 Hoosier households every year. The facility also would be one of the biggest electricity users on the Hoosier Energy system. 

Advocates such as Inskeep and nonprofit environmental law group Earthjustice believe the crypto facility is directly tied to keeping the coal plant open. Earthjustice attorney Mandy DeRoche said it’s no coincidence the timing of staying open with the new large power needs. 

“It’s also not surprising,” she said. “They’re going to the cheapest, easily-accessed and least regulated places and that’s where we are.” 

AboutBit CEO Wade Lewis told IndyStar the company had, at one time, looked into acquiring the Merom power plant. 

Then, in a company release published in 2022, AboutBit said it had entered into a five-year power deal with a member of the Hoosier Energy coop. That means the power Hoosier Energy purchased from the Merom coal plant would go to that member and AboutBit. 

As reported in E&E News last year, one of the crypto company’s founders said critics’ assertions that the power deal could keep a polluting coal plant open was “100% correct.” 

Lewis said that statement was taken out of context, but did not elaborate further. He told IndyStar that AboutBit’s own release is outdated and no such power agreement exists. He also claimed the facility has nothing to do with Merom staying open. 

Rather, Lewis told IndyStar, the company is going to purchase power directly from the MISO grid. IndyStar confirmed with MISO, however, that it’s not possible for retail customers to purchase power directly from the grid. Those customers must purchase power through a utility. 

When pressed on this topic, Lewis said they are “not willing to disclose the terms” of past or current agreements with power providers. 

Neither cryptomining facilities nor rural electric cooperatives face significant federal or local regulations. As a result, advocates say it’s been difficult to get the complete picture of what’s happening in western Indiana.  

“I think there are clearly some key details about this whole arrangement that they don’t want us or the public to know about,” Inskeep said. “The facts and circumstances are too curious for me to think it is a coincidence and that AboutBit has nothing to do with the coal plant staying open, as they seem to suggest.”

The fact of the matter is that the Merom coal plant is still open, with no retirement date in place. Regardless of whether or not it stayed open for the crypto facility, the power plant has a history of environmental violations and it remains unclear what impact its operations will have on customers’ bills. 

The Merom facility was the ninth most-polluting facility for greenhouse gas emissions in the state, according to federal emissions data for 2022. It was behind only a few other power plants and steelmaking facilities. 

The plant also has repeatedly violated pollution levels set in its air and water permits from the Indiana Department of Environmental Management. 

Based on its own filings with the state, the plant has repeatedly dumped wastewater with illegal levels of ammonia and iron into the Turtle Creek Reservoir, which connects to the Wabash River just a couple miles away. These levels can harm aquatic life and also be detrimental to drinking water infrastructure, according to environmental advocates. 

The plant’s own testing also found that groundwater on the property exceeded healthy limits for lead, barium, chromium, cadmium, lead, sulfate and fluoride. 

Even more, the plant has violated air pollution rules by producing an unacceptably high level of dense smoke, which threatens the health of nearby residents who breathe the air. 

“With this plant staying open, there is going to be increased pollution that wouldn’t otherwise have been there because the plant was going to retire,” said DeRoche, an attorney with Earthjustice. 

The violations are not just historic. There there has been at least one violation since Hallador took over operations of the plant. 

Earthjustice, the Citizens Actions Coalition and others have serious concerns about the environmental impacts of the plant both on the surrounding ecosystem as well as the nearby community’s public health. 

Inskeep said he believes IDEM has not “done very much” about the Merom’s “flouting” of environmental regulations and permit limits. 

“If there are no repercussions, are there actually environmental regulations? On paper, sure, but if there is no enforcement then it’s pretty meaningless,” he said. “Are they going to force Merom to comply or are they going to allow them to continue polluting our air and water and potentially harming the health of Hoosiers?”

When asked about past violations and criticism over a lack of enforcement, IDEM said that it “treats all violations consistent” with the Compliance and Enforcement Response Policy as well as the Civil Penalty Policy. 

“IDEM will continue to conduct compliance activities including inspections, surveillance, and review of compliance reports … to ensure compliance with the company’s permits and environmental rules” at Merom, a spokesperson told IndyStar. 

Meanwhile, the Sierra Club and the Hoosier Environmental Council have joined Earthjustice and CAC in submitting a letter to IDEM detailing its concerns of past violations and apparent lack of enforcement. In other words, it wants IDEM to step up. 

This letter was shared exclusively with IndyStar. 

“We believe that with the power plant now slated to continue running for the indefinite future that IDEM should take a much more careful look at the repeated violations and take appropriate enforcement actions to protect people and the environment in the area,” said Earthjustice attorney Sameer Doshi who worked on the letter. 

Local residents recognize the pollution concerns associated with keeping the Sullivan County plant open. Ray McCammon, Sullivan County Commissioner, said his county has been an energy producer for much of the state for many years both with coal mines and power plants. 

“It’s been, in my lifetime, a little frustrating to see that Sullivan County has furnished electricity for the Midwest,” McCammon said. 

Still, the commissioner said he’s happy to have the jobs stay in the area and the tax revenue for the county.

Advocates recognize that is an issue and said the state needs to do more to create a framework for transitioning away from fossil fuels but still maintaining jobs. 

“I do not at all disagree that we need to make sure folks like those working at Merom have viable alternatives and opportunities,” Inskeep said. “I can see the concern and why it feels like they have to choose between jobs and environmental protection.” 

While the potential negative environmental impacts are more clear, consumer advocates say it’s unclear if customers will be subsidizing the crypto mine. 

While it is not clear where AboutBit will be getting power, it also is unknown what rate they will be paying and what, if any, discount they are receiving that potentially could be covered by other ratepayers. 

It also is unclear if AboutBit is using any of the existing infrastructure located at the Merom Generating Facility, such as the substation, transformer, or power lines that Hoosier Energy’s ratepayers have paid for. Inskeep said he has questions on whether the crypto company is paying a fair amount to use the equipment. 

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The situation with the crypto facility and the coal plant raises many more questions than it answers, as well as some potential contradictions. 

Such facilities are popping up all across the country, and many of them are locating nearby to coal plants or natural gas plants that were soon to be retiring. In fact, some of them even had already retired and were brought back to life to power the energy-guzzling crypto mining facilities. 

For example, a mothballed coal plant in upstate New York was converted to run on gas and power a large-scale bitcoin mining operation. In western Pennsylvania, a plant that burns waste coal was set to close before it pivoted to bitcoin with thousands of mining computers packed in shipping containers alongside it. And in Kentucky, a new bitcoin facility is being built next to an electric corporation that owns and operates four coal-fired power plants. 

One common complaint across many of the facilities is the noise. The crypto mining facilities are known to be very loud from all the computers and, in particular, all the equipment and fans to keep the systems cool. 

AboutBit, however, says it has developed proprietary infrastructure that will help prevent the noise pollution. 

The crypto company also said it is a sustainable operation and it will be helping to grow and develop renewables in the area. In reality, however, Hoosier Energy has slowed down some of its renewable plans now that it is still purchasing some power from Merom. 

At this time, AboutBit also does not have any agreements to purchase renewable generation in the area, the crypto company told IndyStar.

AboutBit and other crypto companies also claim that they are good for grid stability because they are able to reduce operation during times of peak demand or need. However, in most such arrangements, companies like AboutBit would be paid significant amounts to reduce their power usage — costs that ultimately are borne by other ratepayers. 

The crypto company did not respond to IndyStar questions on whether it would be paid to do so in Indiana. 

Advocates argue the facility will actually increase strain on the grid by adding a significant load. Inskeep recognizes the state will need to add new demand on the grid, but said manufacturing opportunities, for example, bring more jobs and goods for society. AboutBit will add about a dozen jobs to begin with, the company said. 

“It just defies logic in many ways, we don’t need it, it’s not providing benefit and it’s eroding our progress to cleaner energy,” Inskeep said. “It’s really frustrating to see these facilities move in and keep fossil fuel plants open and provide no societal benefits, no tangible goods and just environmental harms.” 

Call IndyStar reporter Sarah Bowman at 317-444-6129 or email at sarah.bowman@indystar.com. Follow her on Twitter and Facebook: @IndyStarSarah. Connect with IndyStar’s environmental reporters: Join The Scrub on Facebook.

IndyStar’s environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.

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