City, Hut 8 insist power usage no issue

By Collin Gallant on September 25, 2018.

cgallant@medicinehatnews.com @CollinGallant

A huge power contract for the City of Medicine Hat is sparking debate about the sustainability of cryptocurrency mining.

A report on Monday from the CBC outlined environmentalists concerns that the emerging financial technology sector requires a massive amount of power. That is mostly derived from fossil fuel generation, thereby adding to greenhouse gas emissions for a non-vital use.

Officials from the city and Hut 8 showed off the company’s now operating data processing centre in Medicine Hat’s north end, and spent great effort to assure media the contract doesn’t jeopardize local power supply.

At that time, company officials also likened its use of large quantities of electricity — equal to one-quarter of the city’s entire production capacity — in parallel terms, as Western Canada attempts to develop its resources base.

Hut 8 CEO Andrew Kiguel said his company uses power that otherwise wouldn’t be produced, and stated the city’s new Unit 16 generator would be mostly idle if not for his company.

“You can see a constant debate about building pipelines, Alberta is a resource rich province,” Kiguel told reporters on Friday, arguing that cryptocurrency is an essential item for some.

“The power we’re using is large, but on a relative basis, it’s still very small.”

Mayor Ted Clugston as well said the contract is structured to pose no risk of power shortage, and cryptocurrency is a sustainable industry.

“For us it is,” said Clugston. “We have a glut of natural gas in this area, stranded natural gas. I’m in the business of selling electricity and I’m OK with that.”

He said it fits with the city’s enterprising nature, and he sees no problem with environmental ethics of the project.

“It’s been a great partnership from day one; we’re a provider of electricity and they are the customer, we produce it and they use it,” Clugston said at the Sept. 21 grand opening.

The operation is billed as the largest such facility in Canada, using more than 65 megawatts of power when in full operation, leading to a power bill of “several million dollars per month,” according to Kiguel.

Hut 8 has a supply agreement in place to acquire 44 megawatts of power from the city’s generating company, plus take on more power via the city’s connection with the provincial grid.

A redacted copy of the contract, obtained by the News, generally lays out some safeguards, but exact details are considered a trade secret under privacy rules.

“Medicine Hat has enough power capacity to service both Hut 8’s load and the city’s load through a heat wave, without any blackouts,” said Kiguel in a statement responding to the CBC report. “In the event of equipment failure, the load to Hut 8 would be curtailed, as is standard for any industrial power producer.”

The city proposed the power plant several years ago to regulators as a way to backstop local power production and ensure supply to all city customers in case of a major failure at the main plant.

Kiguel said the company it exploring ways to reduce its power use, as well as sourcing renewable energy.

Clugston however, reiterated his stance that gas-fired power is required.

“They’re not here for renewable energy, because it’s not reliable. They need gas-fired generation and we have it in spades. Burning gas to make clay or bricks and burning gas to make Bitcoin, I don’t see a problem with it.”

21
-20

Comments are closed.