National Post (National Edition)
In bitcoin mining, can Alberta be the new China?
A mass exodus of bitcoin miners from China has been underway since June, when Beijing doubled down on a cryptocurrency crackdown. The efforts included having local authorities order energy companies to halt the supply of power to bitcoin farms, leaving miners little choice but to pack their bags for more crypto-friendly pastures.
The miners weren't left in limbo for long. Many found new homes in the United States, Russia and Kazakhstan.
Since mid-July, Alberta, too, has been on the radar.
That's when the Nevada-based Black Rock Petroleum Company struck a deal to bring up to one million bitcoin mining machines to three natural gas plants in southern Alberta.
While no specific timeline was announced by the company, a press release stated that the company was looking to hold 24-month contracts with the possibility of extending them. This will start at the Quirk Creek natural gas plant located southwest of Calgary, where the first 200,000 units would be hosted. It is currently being operated by Calgary-based Caledonian Midstream Corp., which was acquired by Black Rock in July.
Brian Mosoff, the chief executive of Canadian crypto firm Ether Capital and an entrepreneur focused on cryptocurrencies, told Financial Post that Bitcoin miners will naturally gravitate to energy sources with affordable rates.
“Alberta is a great place to go,” Mosoff said. “It really comes down to: can they co-locate next to some other business that gives off energy as a byproduct to another service they're performing; or can they make a deal with government or the energy company locally to source however many megawatts at a certain price and lock that in for a number of years. You could do that in Alberta.”
Mosoff added that Quebec and Ontario are other hubs that miners could set up shop and find these kinds of benefits, though Alberta may have the most competitive rates for energy.
Securing a consistent supply of energy at a low cost is a boon for miners, but the deal could also benefit energy companies that are looking for potentially lucrative business avenues while the pandemic has shut down global travel and tamped down energy demand. As well, governments pushing more renewable energy sources have put pressure on companies in the fossil fuel space.
Earlier this year, an idled coal power plant in upstate New York got a new lease on life to pursue crypto mining operations and a coal plant in Montana bulked up to do the same. Alberta's energy patch could look to build on this recent deal.
According to Mosoff, Canada also potentially has a lot to gain from Bitcoin mining operations making their way over, even if Bitcoin has a bad reputation when it comes to its carbon footprint.
“Canada has an opportunity here to say, `We are not going to impose those same requirements and obligations on people who are doing proof of work mining or proof of stake validation and we're going to welcome that activity to come to Canada',” he said. “The advantage here is probably this window in time where we can welcome those activities and jobs to come up here (and) we can influence the type of energy that they use. You can push them towards more renewables.”
It may take some time to fully roll out Bitcoin mining operations in Alberta. They require strong internet connectivity and specific skills, and can cover a lot of territory.
However, if the regulatory hurdles on the crypto and energy production front are cleared and Bitcoin mining finds its footing in the province, then Alberta may have the potential to become a new crypto hub in Canada.