The Chronicle Herald (Provincial)
Banking on bitcoin's boom
Newfoundlander understands cryptocurrency's value firsthand via fabrication business
The growing mainstream acceptance of Bitcoin is music to the ears of St. John's native Steve Barbour.
Elon Musk, founder of Tesla Inc. and second-richest man in the world, gave Bitcoin a boost by tweeting that his electric car company had bought Us$1.5-billion worth of it. He also said Tesla would eventually let people buy their cars with Bitcoin.
"I'm a big believer in Bitcoin, so it's not surprising to me when you see prominent individuals like Elon Musk make the decision — it was a big investment, but it really wasn't that big for Tesla,” said Barbour. “Getting Tesla exposed to Bitcoin, having Bitcoin in the treasury, that's a growing trend. We're seeing a lot more companies doing that."
Barbour's own business in Lloydminster, Alta., has been banking on the success of cryptocurrency for a number of years — he believes it's the future of money. It is created through a sophisticated problem solving and encryption process called mining. That process requires significant computational power, and that's where Upstream Data Inc. enters the picture.
“"I'm fundamentally invested in the tech,” said Barbour, Upstream's president and CEO. “I really, truly believe that Bitcoin represents a paradigm shift in how money is created and distributed.” Early adopter Barbour started the company in early 2017 and was its sole employee starting out. An engineering graduate of Memorial University, he moved to Alberta in 2011 and worked in the oil and gas sector for a number of years.
Through his knowledge of the sector, Barbour saw the potential for waste energy
from oil fields to power Bitcoin mining. According to Upstream, 1,000 standard cubic metres of methane quality natural gas can power a load equivalent of 100 kilowatts for a day.
"In the (Lloydminster) heavy-oil region, we waste a lot of gas," Barbour explained. "You see flaring anywhere there's an oilfield. Even in offshore Hibernia and the Searose FPSO (in the White Rose oil field) ... there's flaring. Flaring is just a way to get rid of the gas, because they can't get it to a market.
“The opportunity was obvious to me when I was learning about Bitcoin and how Bitcoin mining is a way to bring the market rate to the source of stranded energy. It's the only technology on the planet where you don't need the energy to be approximated close to the market — you can actually bring the market to the energy ... And nobody was doing it at the time I started the company." Building datacentres Upstream produces fabricated modular Ohmm Bitcoin mining datacentres, importing the computers and manufacturing and fabricating everything else needed.
"It's a really good option for an oil field, because they're portable," Barbour said.
The monetary arrangement
varies depending on the customer, Barbour explained. In some cases, Upstream maintains ownership of the computers and creates the Bitcoin, paying a fee to its client whose energy waste powers the datacentre. Other agreements have worked the opposite way, with the client taking ownership of the computers and mining the Bitcoin. Upstream is paid a fee in this scenario.
Over the last year, the value of one Bitcoin has skyrocketed, climbing from a low of just under US$5,000 in March to a recent high within the last week of over US$58,000. That figure was almost double its value a month earlier.
Sales for Upstream have increased almost in tandem with the rising value of Bitcoin, according to Barbour. The company found most of its initial customers in Alberta and Saskatchewan, primarily attracting interest from oil and gas producers. Its products are now sold throughout North America, attracting interest as far away as Texas. These days, the company fields lots of cold calls from customers inquiring about datacentres.
"Back (in 2017) when I knocked on doors doing sales meetings with oil field (owners) in Calgary, a lot of them had not heard of Bitcoin, let alone Bitcoin mining on oil
wells," Barbour said. "It was brand new to them. Nowadays, basically everybody in Calgary and everybody in the oil fields, most people at least, have been hearing about the technology."
Future opportunities The company purchased its fabrication facility in late 2020, having rented the space for more than a year up to that point. Upstream employs 13 workers.
Barbour said there's plenty
of potential for Bitcoin mining in Newfoundland and Labrador. He would like to eventually make inroads into the Labrador market.
"Just speaking about mining in general, (the data centres) are quite a good option for any low-value energy, and Newfoundland is full of that ... and I don't really think Newfoundland is taking it seriously, unfortunately."