Three natural gas-producing sites in southern Alberta could host “up to one million” bitcoin mining machines relocated from China under a deal proposed by Nevada-based Black Rock Petroleum Company amid Beijing’s ongoing crackdown on cryptocurrency production and trading.
Bitcoin is a digital currency that can be sent between users without the need for a central bank, leveraging blockchain technology to maintain a decentralized ledger of transactions. Bitcoin’s value has spiked in the last year.
The process of unlocking new bitcoin to add to the existing supply is calling “mining.” This requires the use of computers with powerful processors in an energy intensive process.
No timeline for the deal was immediately announced, though the contract term for using the natural gas sites is listed as 24 months, according to a press release from Black Rock Petroleum Company.
Earlier this year, Chinese authorities cracked down on bitcoin mining due to apparent environmental concerns and other issues, ordering miners to shut down.
Up to one million mining machines, or rigs, entering Alberta would represent a significant chunk of China’s prior total mining capacity, experts say, with major impacts in energy consumption in the province.
A crypto mining farm operates in a former Soviet-era car factory warehouse in Moscow in 2018. (Maxim Zmeyev/AFP/Getty Images)
Alex de Vries, a researcher and economist who runs the cryptocurrency analytics website Digiconomist, said the move to Alberta would represent a multi-billion dollar investment using fossil fuels as a power source.
“In China, they were using hydroelectric power for at least part of the year, and then the rest of the year they would be using Chinese coal, instead,” he said of the energy source powering the computers used in the mining process.
“But if they’re coming to Alberta and start running on natural gas all year round, it’s not improving the situation of this network, which is already responsible for more CO2 emissions than we are saving with all electric vehicles around the world combined.”
As of Aug. 9, a single bitcoin was worth more than $46,000 US and the total market supply was worth more than $866 billion US, according to the price tracking website CoinMarketCap.
Proposal represents 1/3 of global mining capacity: expert
It’s difficult to definitively determine how many computers make up the global bitcoin mining network; de Vries pegs that number at around three million.
In other words, the one million machines supposedly destined for Alberta could represent around a third of global mining capacity.
Though he’s skeptical of the “astronomical” figures proposed in Alberta, Brandon Arvanaghi, a U.S.-based bitcoin mining engineer who is not connected with the Alberta project, said the full impact of China’s crackdown is not yet fully understood.
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“Basically, every North American miner has started ramping up every facet of their mining operation. They’ve raised more money, they’ve procured more power, they’ve gotten more land, and they’re ready to scale up,” Arvanaghi said.
“As these new miners come in [to North America], you see more jobs coming in, IT staff, electricians, campus managers.”
Bitcoin processors can connect to the electricity grid or directly to an energy producer, such as a natural gas plant, to power their computer network.
While bitcoin miners tend to gravitate toward the cheapest sources of electricity, Arvanaghi said there are benefits to natural gas producers, too. Certain bitcoin mining companies utilize flare gas from oil drilling, saving it from being burned.
Black Rock Petroleum Company, not to be confused with BlackRock, the giant New York-based investment firm, said in a release that the first 200,000 mining units would be hosted at the Quirk Creek gas plant, located near the southwestern hamlet of Millarville, Alta.
For a mining unit, picture a powerful computer with cooling fans. Each individual unit might not look too different from your home desktop PC processor — but the guts of this hardware are specifically designed to handle intensive and heavy-duty computing work.
Bitcoin processors solve complex mathematical problems to enable bitcoin transactions, and miners earn bitcoin for doing so. (Bahador Zabihiyan/Radio-Canada)
It’s unclear what the project could mean for Alberta’s tax base. Black Rock said the site would be staffed by Chinese and English speaking technicians and other employees, but it’s unclear how many jobs the project would entail.
The logistics of bringing such a large number of mining rigs to rural Alberta would be challenging, Arvanaghi said.
“To facilitate that, you need a lot of land, you’ll probably need a substation, you’ll need internet connectivity out there, a lot of staff who know how to operate these miners … basically, there’s a lot of things that can go wrong with this.”
The Quirk Creek plant is operated by Calgary-based Caledonian Midstream Corporation, which was acquired by Black Rock in early July.
Charles Selby, president of Caledonian, said in an email that the company had entered into a non-binding letter of intent with Black Rock, which is subject to financing and other conditions.
Significant hurdles to clear
At this stage, Quirk Creek may not be equipped to handle the demands such a significant number of bitcoin processors would require.
“Given our current gas production, a more reasonable number of miners would be 10,000 rather than the 200,000 referenced in the press release,” Selby said.
In a brief phone call, Black Rock chief executive officer Zoltan Nagy said additional energy generation to meet the company’s needs would be achieved by adding generators to the site.
Nagy said additional details surrounding the financials of the deal would be forthcoming. Conducting a full interview at this time was premature, he said.
An illustration showing a representation of the virtual currency in front of China’s flag. China has cracked down on bitcoin mining in recent months. (Dado Ruvic/Reuters)
He said his company had been pursuing the purchase of Caledonian before the opportunity to relocate the Chinese bitcoin units arose.
The top end of Black Rock’s projections — one million mining machines — would suck up a gigantic amount of power in Alberta.
De Vries, the founder of Digiconomist, said depending on the exact equipment type, those machines would need between one gigawatt (GW) to 3.5 GW of power — which, by de Vries’s calculations, would take up roughly 10 to 30 per cent of the total natural gas-based electricity production in Alberta.
“What they would need would represent such an enormous part of the power available in Alberta,” de Vries said, adding that such projections make him skeptical of the plan as stated.
Black Rock Petroleum Company’s website features two profiles — that of Philip Andrews, president of the subsidiary company Torrance Petroleum, and of Zoltan Nagy, the company’s president, controlling executive officer, treasurer, secretary and director. Both profiles are illustrated, for the time being, with stock photographs. (Black Rock Petroleum Company)
Power plants in Alberta cannot be constructed or operated without approval from the Alberta Utilities Commission (AUC), and the province has other rules governing the production of electric energy.
The Quirk Creek plant would almost certainly need approval from the AUC to host the bitcoin machines.
Nagy said Black Rock hasn’t reached out to provincial representatives but said the company was looking into it.
Questions around finances
Far more than a few computer towers in an office building, the sheer size of bitcoin mining facilities can be surprising. For example, in 2018, at the grand opening of Hut 8, a bitcoin mine in Medicine Hat, Alta., the facility started with 56 shipping containers each filled with 180 computer servers, operating around the clock.
Hut 8, which operates a bitcoin mine in Medicine Hat, Alta., says it is currently the biggest player from a bitcoin mining perspective in Canada, with 109 megawatts of installed power. (Kyle Bakx/CBC)
Black Rock Petroleum’s filings with the U.S. Securities and Exchange Commission are limited, so its financial status is difficult to ascertain.
Alfred Lehar, an associate professor studying finance at the Haskayne School of Business at the University of Calgary, said it’s hard to know definitively whether there is enough financial backing to make this deal happen.
“It’s certainly a very junior company that does not have a lot of assets compared to big energy companies that we are used to here,” Lehar said.
Armed guards
Under the terms of the Quirk Creek agreement, Black Rock’s press release said, Black Rock would work in partnership with China-based Optimum Mining Host Ltd. (OMH), which would cover many of the costs anticipated to arise out of the arrangement.
Josh Goodbody is chief operating officer of Qredo, another cryptocurrency firm and a mining expert who used to work in China who has no connection to the Alberta project. He said consortiums of miners moving into North America have become increasingly common after China’s crackdown.
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“Domestic miners [have] to internationalize themselves, set up an offshore or global presence, and do that in a place like North America,” Goodbody said. “And [then], bring all of their hardware along with them.”
According to Black Rock Petroleum, OMH would be responsible for providing 24/7 armed security guards at the site “with enforcement power.”
Concerns over environmental impacts
Even if Black Rock Petroleum’s proposal does not live up to its billing, the act of pairing natural gas and bitcoin mining is no new phenomenon.
Saeed Kaddoura, an analyst with the environmental think-tank Pembina Institute, called bitcoin mining a “parasitic process” — one that he characterized as being “energy gluttonous [while chasing] the cheapest electricity around the world.”
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“We should be looking at the underlying technology of blockchain, and how can we utilize that to develop [the] technological sector in Alberta that supports the oil and gas industry,” he said.
“But bitcoin mining in itself, I don’t think that’s something we should be attracting without any oversight.”
As a way to store data securely, the blockchain is a decentralized ledger shared across multiple computer systems that publicly shares all transactions. Bitcoin uses the blockchain.
CBC News reached out to Alberta Environment and Parks to inquire about environmental considerations when it comes to bitcoin mining in the province, but did not receive a response by press time.
On Monday, the UN climate panel sounded a dire warning, cautioning “irreversible” climate impacts and warning that humans were dangerously close to runaway warming.
De Vries of Digiconomist said that report raised warning flags for bitcoin mining projects around the globe.
“Even if these miners are not going to be in Alberta, they will probably end up in different locations, where they will probably run on fossil fuels regardless,” he said.
Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.
The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.
Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.
The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.
Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”
“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.
“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”
Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.
The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.
It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.
Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.
It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.
“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.
Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.
The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.
Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.
The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.
“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.
Asked how long that environment could last, he said that’s out of Telus’ hands.
“What I can control, though, is how we go to market and how we lead with our products,” he said.
“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”
Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.
On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.
That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.
Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”
“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.
“We will continue to monitor developments and will take further action if our codes are not being followed.”
French said any initiative to boost transparency is a step in the right direction.
“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.
“I think everyone looking in the mirror would say there’s room for improvement.”
This report by The Canadian Press was first published Nov. 8, 2024.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
