Coal waste, a by-product of coal extraction, adversely poses environmental hazards as it releases harmful substances into the air, water, and soil, damaging the ecosystem and localized biodiversity. The coal-to-energy sludge-seeded bioconversion shows its potential as an environmentally friendly technology to mitigate the harmfulness of coal-derived hazards. This study uses blended coal and anaerobic digestion sludge in batch reactors at a mesophilic temperature (35 °C) to generate methane-rich biogas for energy production and waste elimination. Nutrient solution and ethanol were added as stimuli to boost bioactivities and enhance gas production. These results showed the potential of lignite coal in biomethane generation over an extended period, even with a lower volume of sludge addition. Adding nutrients and ethanol enhances the ultimate biogas production as an extra feed for microorganisms and as a key parameter in increasing the bioavailability of coal. The ultimate biogas production from the kinetic model indicates a remarkable volume of 111504 mL/g-sludge using lignite with 20 mol ethanol compared to the blank reactor with 701 mL/g-sludge of biogas production. The intricate analysis of results highlights the complex interplay between coal, sludge, nutrients, and additives, where varying factors impact methane production rates. Despite challenges in interpreting data, this study underscores the potential for managing coal waste through wastewater utilization, transforming it into methane-rich biogas—a sustainable green technology for energy production.