In Rural Pennsylvania, Crypto Mining Offers a Lifeline for Dying Gas Wells

Holly May first heard the roaring noise during a youth hunting event on state game lands in the fall of 2022. 

“It’s back a ways,” May said of the noise. “It was an area that I previously had liked to hunt in.” The plot of land, State Game Lands 44 in Pennsylvania’s northwest, was once home to a coal mine — since revegetated with native and pollinator-friendly plants and stocked with pheasants by the Pennsylvania Game Commission. Today, traces of its mining past are covered by tall, waving grasses and clusters of goldenrod flowers.

Getting to the site requires maneuvering up a treacherous gravel hill road and past a gate with a sign identifying the lessee of its mineral rights: Diversified Production LLC. Where the trees clear, grassland opens up, offering cover to the critters that May and others both hunt and protect.

But that fall day, finding pheasants was harder than usual. “It literally sound[ed] like you’re standing beside an airplane taking off,” she said.

May, a natural resources professional, wouldn’t find out until months later that the sound was coming from a different kind of mining operation than this land has grown accustomed to — one that searches for bitcoin. 

The bitcoin mine sits atop a set of wells producing natural gas that — rather than being transported and sold — can be used to power banks of supercomputers that work around the clock to unlock cryptocurrency, a lucrative process. Today, one bitcoin is worth around $67,000.

Diversified Production’s crypto mining operation at Longhorn Pad A in Elk County, PA.

When May heard it roaring that day, the mine was up and running but without authorization from state regulators. The oil and gas producer Diversified had yet to secure the required permits to hook up the engines that power cryptocurrency mining on the low-producing fracking well pad, called Longhorn Pad A. Nonetheless, it ran for several weeks, one resident estimated. 

Pennsylvania’s Department of Environmental Protection (DEP) later slapped the company with a notice of violation for breaking state air pollution and noise laws. 

Then, without handing down any punishment, the regulators approved the mining operation in December.

The mine was the second Diversified site to be hit with a violation for operating without a permit. The agency did so as well at a neighboring site, Longhorn Pad C, which regulators discovered in March 2023. It also received the necessary permits for bitcoin mining two months later. Diversified, which has acquired some 70,000 wells in less than a decade, has surpassed Exxon Mobil Corp. to become the largest well owner in the nation. Many of these wells are low-producing and represent a risk if the company can’t afford to plug them at the end of their lives.

The situation adds to the growing concern about a potential surge in bitcoin mining — and its potential to increase air pollution — throughout Pennsylvania. Across the country, crypto mining is blamed for producing millions of tons of carbon dioxide and consuming vast amounts of electricity — more than some entire countries.

“We have invested tens of thousands of dollars in habitat work on that game lands,” May said. “Now, it’s really disturbing to use that whole back section … not to mention the greenhouse gas emissions.” 

In issuing permits for the site, the DEP opted not to put a cap on its greenhouse gas emissions, noting that the site is not a “major” source of emissions relative to other polluters in the state, such as power plants. But the department did place a noise limit on the mine, even though Horton Township, where the mine is located, had already adopted a bitcoin mining ordinance that limited noise. PJ Piccirillo, a supervisor in Horton Township, said he was never contacted by Diversified Energy about the site throughout the entire permitting process.

The agency also forgave the company’s infractions in granting the permit, saying that Diversified had “satisfactorily addressed violations.”

In an email to Capital & Main, the DEP said Diversified has not yet started full-time operation of the bitcoin mine at Longhorn A because it has yet to install the “sound mitigation devices” its permit requires.

The bitcoin operations point to a gap in regulatory oversight that has allowed operators such as Diversified to start their mining operations without being fully transparent about their full plans or communicating with local communities about the potential impact of their operations, interviews and government emails obtained through Right-to-Know requests show. Regulators often lack the bandwidth to properly monitor all infractions, especially in rural areas, and oversight can be fractured — in the case…