Canada Burns Natural Gas For Bitcoins

Canada Burns Natural Gas For Bitcoins

Cheap electricity and cold weather, bring cryptocurrency miners to Canada. Some electricity providers are happy, others fight back.

The gold rush sentiment around cryptocurrencies causes changes on Canadian electricity markets. The low electricity prices there attract many companies that want to mine bitcoins and other cryptocurrencies on a large scale, so that some electricity providers do not comply. But there are also electricity producers who are happy about the business.

These include the city of Medicine in southeastern Alberta. Medicine has 63,000 inhabitants and sits on a natural gas field, which is casually known as “All Hell for a Basement”. The official slogan of the city is “The Gas City”. The natural gas produces cheap electricity, which has already introduced the city several large factories and huge greenhouses.

Recently, Bitcoins are being mined on a large scale: The company “Hut 8 Mining” has installed 40 shipping containers with special computing systems on a 40,000 square meter site, transforming the electricity generated from natural gas into bitcoins and possibly other cryptocurrencies.

A Lot Of Power, For a lot Computers

67.2 megawatts draws the plant around the clock, which brings 504 Petahashes per second. Electricity consumption can be even more during the day than any other electricity customer in town, including factories.

A summer clause to secure the power supply: In a heatwave, the municipal utilities have secured according to CBC the right to provide Hut8 no electricity. Power consuming air conditioning systems then run at full speed.

Hut8 is not worried: “Medicine Hat has enough capacity to provide both Hut8 and the city in a heatwave” company boss Andrew Kiguel said, “Without power outages.” In the event of a technical breakdown, power would be cut off.

Electricity price is a secret thing

The mayor of Medicine announces the electricity price for private households: The average price of all other electricity suppliers in the province is estimated. Then there is a “going green surcharge” of $0.0005 per kilowatt hour. What Hut8 pays, but remains secret. Only the land rent of less than 6,500 dollar per month is known. The mayor is pleased about the electricity sale and the extra 42 jobs.

No money machine at the moment

Whether that will suffice for profits remains to be seen. In the second quarter, when the Medicine plant was still under development, the company was able to mine 786 bitcoins. Invoices are paid for part of the virtual coins. The remaining bitcoins are saved, although the net quarterly loss reached nearly five million Canadian dollars.

This includes a loss of $1.5 million in stored bitcoins: “We are optimistic about the long term price evolution of bitcoins,” Kiguel said in August, “We keep our bitcoins, after paying our costs.” So the company is speculating on rising bitcoin prices.