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Bitcoin Mining and an Alberta gas plant in the Rockies
The Rockies.Life Staff

Cryptocurrency Sucks … A Lot Of Electricity And Water!

Alberta welcomes crypto miners but needs strong oversight to manage water and power challenges

Governments across North America are trying to tap the tech gold rush.

Lots of tax dollars are being spent to recruit AI, fintech, and crypto companies. But no Canadian province is rolling out the welcome mat to cryptocurrency like Alberta.

In 2022, former Premier Jason Kenney’s government announced plans to make Alberta a haven for cryptocurrency mining and related cyber businesses that service Bitcoin, Ethereum, Dogecoin and other crypto companies.

His February 2022 throne speech dreamed of Alberta as a “modern electricity powerhouse and a magnet for investment in emerging technology like data storage and cryptocurrency.”

Premier Danielle Smith hasn’t pulled back the welcome mat.

In fact, Danielle Smith is happy to promote Alberta Energy as the answer to crypto’s digital mining operations and vast electricity needs. And beyond just another market hungry for Alberta gas, Smith firmly believes in crypto and its future.

“This is more than an asset; it’s a spiritual philosophy. I think that’s what we’re looking for, is some kind of counter to this government knows best [mentality], that they can step in and interfere with every aspect of your life, seemingly without impunity,” said Smith about cryptocurrency on a podcast in April 2022.

However, should we pump crypto or pump the brake? 

Crypto-mining promotion is alive and well in Alberta, with this event by the Canadian Blockchain Consortium advertising “why Alberta will become the next major Bitcoin mining hub” and that the event will be “attended by important government officials.”
Crypto-mining promotion is alive and well in Alberta, with this event by the Canadian Blockchain Consortium advertising “why Alberta will become the next major Bitcoin mining hub” and that the event will be “attended by important government officials.” | Canadian Blockchain Consortium

Does Crypto Make Sense?

Crypto mining, despite the name, doesn’t involve digging rocks out of the ground; it’s digital mining, but that doesn’t make it cleaner than physical mining. 

Far from it, in fact. 

Crypto is a digital currency, such as Bitcoin, that is used as an alternative payment method or speculative investment. 

Crypto gets its name from the cryptographic techniques that let people exchange payments securely without needing a central government or bank.      

It requires vast, decentralized networks of computers worldwide operating 24/7 that verify and secure blockchains—the virtual accounting system that documents cryptocurrency transactions.

Don’t worry; it doesn’t make much sense to us either.

But we know that crypto requires massive amounts of electricity to power computer servers and vast quantities of water to cool them.

Inside a crypto mining facility | NiseriN
Inside a crypto mining facility | NiseriN

Unknown Water Impacts

According to a recent National Observer article, crypto mining uses 127 billion litres of water annually in Canada. 

One billion litres of water is a small lake, so that’s equal to 127 small lakes every year being wasted on cooling every year. However, those numbers are three years old and are likely underestimates.

As reported by the BBC in November of 2023, a new study suggests that every Bitcoin transaction uses, on average, enough water to fill “a backyard swimming pool.”

Alex de Vries of Vrije Universiteit Amsterdam calculates that’s around six million times more than is used in a typical credit card swipe. 

The crypto sector is growing in Alberta and across Canada, and nobody knows how these operations will impact local water supplies.

“The short answer is we don’t really know the current situation,” said Alex de Vries, the data scientist and researcher in the Netherlands who analyzed the growing water footprint of Bitcoin mining and transactions worldwide. 

“They all claim to be transparent, until the moment you start asking them questions, and then they suddenly stop talking.”

That’s a big problem, especially in Alberta, where drought and water shortages impact everyone.

Drought conditions have persisted across Alberta for over three years
Drought conditions have persisted across Alberta for over three years | Alberta.ca

Creating More Carbon? 

In a report by The Narwhal, Albertan entrepreneur Koleya Karringten, Executive Director of the crypto industry group Canadian Blockchain Consortium, estimated there were at least 40 crypto mining companies in Alberta in 2022.

Most of these are powered by natural gas to generate their electricity.

In fact, some oil and gas companies are reopening closed gas plants specifically to service crypto-mining.

Koleya Karringten, Executive Director of the Canadian Blockchain Consortium, a crypto industry group, told the Narwhal that there were “large oil and gas companies currently in the province of Alberta that are looking to diversify their assets by adding generators to their sites and being able to mine” cryptocurrencies.

Gas companies love crypto because it creates a new reason to build and operate gas-powered electricity facilities. 

However, like other projects that use fossil fuels, burning natural gas creates carbon pollution and worsens the changing climate. 

A report from Alberta’s Sturgeon County, where MAGA Energy uses natural gas to power a crypto facility, clearly states that MAGA Energy’s operations would “increase emissions.” 

The report also noted that this goes against the county’s goal of “environmental stewardship.”

Critics of crypto argue that by giving new life to old oil and gas facilities, fossil-to-crypto schemes threaten to prop up a dying fossil fuel industry and put emissions-reduction targets in jeopardy.

The widespread adoption of cryptocurrency has the potential to accelerate global carbon emissions | Jernej Furman | Flickr
The widespread adoption of cryptocurrency has the potential to accelerate global carbon emissions | Jernej Furman | Flickr

What About Oversight?

Alberta has recently restricted where renewable projects can operate to prevent unchecked development and a repeat of Alberta’s orphan well fiasco.

Will crypto-mining operations be subject to similar restrictions? 

Any company wanting to set up a power plant must get approval from the Alberta Utilities Commission (AUC.)

Last February, the AUC fined a Vancouver-based company for running three illegally-powered crypto mining operations. 

A Utilities Commission investigation, prompted by noise complaints about a natural gas plant in Sturgeon County north of Edmonton, found that Green Block Mining had set up a 1.25-megawatt plant to power computer servers all housed in shipping containers.

That led to the discovery of two other crypto-mining operations the company was running in southern Alberta.  

Green Block was ordered to pay a $346,500 penalty and $60,000 to cover the Utilities Commission’s legal fees. It also agreed never to operate again in Alberta. 

That’s good work by the Utilities Commission.

Alberta needs strong policy and oversight in this emerging digital currency sector before things get completely out of control. 

Crypto can be set up anywhere in Alberta because if it is natural gas-based, it faces fewer restrictions than renewables. 

Crypto mining might seem like the shiny new thing in the toy store of economic development, but buyer beware.

Alberta can’t afford another poorly regulated user to add to our water and electricity shortages. 

We also cannot afford to open the floodgates to natural gas-fired crypto miners and lose the hard-fought ground gained in the battle to green up and stabilize the province’s electricity grid.   

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