Bitcoin-Mining Power Plant Secretly Launched in Alberta, Tapping Dormant Gas Well (www.cbc.ca) 62
"When residents of an affluent estate community in Alberta started hearing noise from a nearby power plant, they didn't expect their complaints of sleepless nights would lead to a months-long investigation that would find a bitcoin mining operation had set up shop without approval," reports the CBC:
Now, Link Global, the company behind the site, is being ordered by the province's utility commission to shut down two plants until it can prove it's allowed to operate — a move the company says will cost jobs and cause the oil and gas infrastructure in which it operates to sit dormant....
Vancouver-based Link Global had set up four 1.25 MW gas generators at the site, pulling power from a dormant natural gas well owned by Calgary-based company MAGA Energy. The natural gas powers thousands of computer servers that run programs to "mine" digital currency... Work on the plant began in August 2020, and by fall — when neighbours started to get annoyed — it was operating at full capacity. There was just one problem: The company hadn't notified neighbours of its plans. Or the county. Or the provincial utilities commission — which allows power plants to be set up without approval if they meet several conditions, including only generating power for the company's own use and proving the plant has no adverse effects on people or the environment...
Alberta is littered with nearly 200,000 dormant or abandoned oil and gas wells, often because they're no longer economically viable. It has raised the spectre that landowners and taxpayers could be on the hook for the cleanup costs, which the province estimates could be up to $30 billion, as well as prompted a push to find other uses for the facilities, such as powering cryptocurrency operations. Stephen Jenkins, Link Global's CEO, said some of that abandoned energy infrastructure, is at risk of leaking methane — a greenhouse gas more potent than carbon dioxide. "We look at, OK, what can we do to use this in a beneficial way ... I don't want to say we're in the business of methane destruction, but we're in the business of beneficial use of that potential methane-generating source. You combust it properly. You don't flare it, and you control those emissions," Jenkins said...
And though the facility employs only four people, Jenkins said it's important to him to employ locally and give former oil and gas workers a path into other careers. The Sturgeon County plant's supervisor is a former pipefitter; he's now a bitcoin pro and an expert at keeping the plant online, Jenkins said. "It's a perfect use of people's skills," he said.
Of course, it's not all altruism. The company has said for every 10 MW of power, it can generate about 1.2 bitcoins per day.
Last Friday the Alberta Utilities Commission (AUC) ruled that the plant had indeed been violating their regulatory requirements, and would now also have to suffer a financial penalty which the CBC reported as "a $50,000 to $75,000 fine, reduced by up to 50% because Link Global admitted to breaking the rules..."
"More penalties could be on the way. The AUC will now review whether specific sanctions should be imposed against Link Global for operating without approval — a decision on that is expected this fall."
The CBC adds that another Link Global plant was also found to be "set up without the AUC's prior approval."
Vancouver-based Link Global had set up four 1.25 MW gas generators at the site, pulling power from a dormant natural gas well owned by Calgary-based company MAGA Energy. The natural gas powers thousands of computer servers that run programs to "mine" digital currency... Work on the plant began in August 2020, and by fall — when neighbours started to get annoyed — it was operating at full capacity. There was just one problem: The company hadn't notified neighbours of its plans. Or the county. Or the provincial utilities commission — which allows power plants to be set up without approval if they meet several conditions, including only generating power for the company's own use and proving the plant has no adverse effects on people or the environment...
Alberta is littered with nearly 200,000 dormant or abandoned oil and gas wells, often because they're no longer economically viable. It has raised the spectre that landowners and taxpayers could be on the hook for the cleanup costs, which the province estimates could be up to $30 billion, as well as prompted a push to find other uses for the facilities, such as powering cryptocurrency operations. Stephen Jenkins, Link Global's CEO, said some of that abandoned energy infrastructure, is at risk of leaking methane — a greenhouse gas more potent than carbon dioxide. "We look at, OK, what can we do to use this in a beneficial way ... I don't want to say we're in the business of methane destruction, but we're in the business of beneficial use of that potential methane-generating source. You combust it properly. You don't flare it, and you control those emissions," Jenkins said...
And though the facility employs only four people, Jenkins said it's important to him to employ locally and give former oil and gas workers a path into other careers. The Sturgeon County plant's supervisor is a former pipefitter; he's now a bitcoin pro and an expert at keeping the plant online, Jenkins said. "It's a perfect use of people's skills," he said.
Of course, it's not all altruism. The company has said for every 10 MW of power, it can generate about 1.2 bitcoins per day.
Last Friday the Alberta Utilities Commission (AUC) ruled that the plant had indeed been violating their regulatory requirements, and would now also have to suffer a financial penalty which the CBC reported as "a $50,000 to $75,000 fine, reduced by up to 50% because Link Global admitted to breaking the rules..."
"More penalties could be on the way. The AUC will now review whether specific sanctions should be imposed against Link Global for operating without approval — a decision on that is expected this fall."
The CBC adds that another Link Global plant was also found to be "set up without the AUC's prior approval."
Absolute insanity (Score:5, Insightful)
Re: (Score:1, Informative)
Someone needs to read TFA...
Stephen Jenkins, Link Global's CEO, said some of that abandoned energy infrastructure, is at risk of leaking methane -- a greenhouse gas more potent than carbon dioxide. "We look at, OK, what can we do to use this in a beneficial way ... I don't want to say we're in the business of methane destruction, but we're in the business of beneficial use of that potential methane-generating source. You combust it properly. You don't flare it, and you control those emissions," Jenkins said...
These guys are fighting climate change by combusting methane gas. That's a good thing.
Where they've gone wrong: apparently made too much noise and haven't paid off the local government sufficiently enough.
Re:Absolute insanity (Score:5, Insightful)
but we're in the business of beneficial use of that potential methane-generating source. You combust it properly.
Natural gas power plants already do that, except the electricity thus generated is then consumed in much more useful ways, so there's that.
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their shady operation is absolutely not going to have any methane leaks of its own. Totally inconceivable.
With a name like MAGA Energy, you know they're guilty.
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As it stands there was nothing illegal per se about what they were doing except that they didn't do the normal things that any business has to do. Licensing, zoning, permits, approvals. Also I think they have to track resource usage to pay royalties but that is probably the responsibility of Maga, the well owner.
They would have been alright if they had better silencing on the power plants.
The whole thing is a modular, turn key operation, and is designed to be replicated at a minimal cost. About four to
Re:Absolute insanity (Score:4, Informative)
A total money generator.
Let's do the math:
From TFA: 10 MW = 1.2 bitcoins per day
10 MW * 24 hours = 240,000 kWh.
The wholesale price of electricity in Alberta is about 5 cents. So that is 240,000 * 0.05 = $12,000.
1.2 bitcoins at today's market price of $49k = $59k
So they are using $12k of power to create $59k of bitcoins for a profit of $47k per day.
Yup. Definitely looks like a money-spinner.
Of course, they have to pay for their ASIC mining rigs, but that's a sunk cost.
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They aren't paying 5c; they aren't on the grid. They brought in four 1.5 MW gas generators.
We don't know what Maga is charging them for the gas from the dormant well. We also don't know if there is a requirement to measure gas production and pay the province royalties for gas produced.
Maga might be getting a percentage of bitcoin produced in which case power cost is virtually zero, you just have a business partner who splits the profit in some manner.
Various support expenses are going to eat into the pro
Re: Absolute insanity (Score:2)
Re: Absolute insanity (Score:2)
The ASIC mining rigs have to be refreshed every year or so. You can't just hand wave away the cost.
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Sorry what?
Re: Absolute insanity (Score:2)
Re:Absolute insanity (Score:5, Insightful)
These guys are fighting climate change by combusting methane gas. That's a good thing.
No.
That is only true if you assume the alternative to combusting methane gas is releasing it into the atmosphere. The best alternative is to leave it in the ground.
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So other than ignoring all requirements to operate in the area and keeping everyone within 10 km (314 km^2) awake at night every night, it was all cool?
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These guys are fighting climate change by combusting methane gas. That's a good thing.
Not as good as leaving it buried deep in the ground where it was.
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You know what would fight climate change even better? Properly capping the abandoned well so it doesn't leak any methane. I guess there isn't enough profit in doing that though.
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Re:Absolute insanity (Score:5, Insightful)
Personally I think cryptocurrency is very useful.
For what? Changing value unpredictably? Providing an easy way for a hacker to empty your bank account? Free you from those pesky consumer protection regulations the gubbmit forces on your bank? Maybe it's the complexity you like, or the insanely slow transaction processing time? Or maybe you just trust some fly by night hackers more than people who follow strict laws?
Which of these traits do you find useful? It's certainly not useful to pay for things... which is a somewhat important feature for a currency.
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Re: Absolute insanity (Score:2)
It's great for traveling to foreign countries that aren't well connected to the U.S. banking regime. Pulling your money out of Wells Fargo bank in East Africa is like pulling teeth. Finding someone to exchange local currency for Bitcoin is straightforward.
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SELL!!!!! (Score:2)
If you want to save the environment, sell Bitcoin. Buy a different currency that does not require oodles of energy.
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Re: Absolute insanity (Score:2)
Really? That's how it works? (Score:3)
Yet if I want to exploit natural resources for literally NO REASON and pollute the planet, and do all that illegal, piss off all the neighbors and everyone around, break numerous laws.... I can get $30 or $40,000 knocked off the fine if I "admit" it?
Way to go Canada.
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Way to go Canada.
It's Alberta.
Texas with a tuque.
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I had to look it up "tuque" and I laughed so loud that people next to me started smiling, thinking I was insane :)
Very well done
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Re: Here come the simps... (Score:4, Funny)
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Alberta was green the last time America was great?
Parasite Company, mining needs to be treated same. (Score:2)
NO.
Treat them as they are, thieves.
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Although I have sympathy for your point of view, Maga and Link Global probably were in it together.
Pay fines in bitcoin (Score:2)
Just 2 or 3 should cover it.
noisey neighbors, numbers and "next door" (Score:3, Interesting)
I can hear it now. Silencer what's that?
1.2 Bitcoins * $50,000/BC = $60,000/day
$60,000/120,000 KWh = 50 cent / KWh, wow already huge margins
figure 40% - 45% genset efficiency
293 *
~1000 MMBTU/day at $2/day (royalties and minor production expenses, high) = $2000/day
4 employees x 12.5 hr/day * $40/hr = $2000/day
amortize four 1250 KW gensets at $800/day each = $3200/day (new, 1 yr, although I suspect they were old scrappers reconditioned)
$7200/day (high side) + their mining rigs
These guys were greedy assholes that didn't have a clue to running a pirate operation long term with a little money spent to keep the neighbors happy. We have had an illegal commercial entertainment operation next door (weddings, riotous parties e.g. 1000w speakers and blood curdling screams at 3 am). The guy was a (now former) "IRS" director and could get away with murder because the municipalaty and association were afraid of him. It took us years to quiet his operation down.
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errata $30,000/day (Score:1)
Installation is 5 MW
so "only" $30,000/day
still stupid, greedy assholes
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The neighbors have every right to complain, and maybe demand a piece of the action or neighborhood quality of life offset fees.
$75k fine is a day of operations? (Score:2)
Seems like the fine is a small cost of doing business. Less than a most marketing budgets.
$45k/BTC and running 4x1.25MW that's $35k they made today.
Ha. They can run them as peaker plants, used only when the price of BTC is over a day's fine...
Bitcoin mining is not eco-friendly (Score:2)
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Re: Bitcoin mining is not eco-friendly (Score:2)
No one is plugging in their computers and mining Bitcoin. Bitcoin is produced almost entirely by professional large-scale operations using purpose built hardware. One of the most critical components of a successful mining operation is cheap electricity. Renewables are generally becoming cheaper, so we can expect mining to largely move to renewables.
Keynes Spins in His Grave (Score:3)
I'm old enough to remember when libertarians used to talk shit at Keynes for this quote. How dare the government waste money on digging holes just to give people jobs. And now we've got a true self-made entrepreneur demanding his right to spend natural gas on meaningless tokens, because think of the jobs.
Re: Keynes Spins in His Grave (Score:1)
Keynesian economics hasn't been a useful model since the 80s. Keynes was describing shit as it was in the 30s. The world economy has changed, and Keynes is now considered somewhat obsolete. No one should care what Keynes thinks.
That said, you're mischaracterizing this miner's claims of "rights". They followed existing law and regulation. They just want a stable business environment where they are on equal footing as everyone else and don't get his with ex post facto regulations that undermine their business
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They don't need approval, but do need approval? (Score:2)
So, you don't need regulatory approval to generate your own power, you just need to go to the regulators and have them approve you for unapproved operation?? Is that the result of bad reporting/editing/summarizing, or are the laws just insa