February 29th, 2024

Emergency alert, city deals idle Hat’s bitcoin mines

By COLLIN GALLANT on January 16, 2024.

NEW FILE PHOTO

cgallant@medicinehatnews.com@CollinGallant

Two bitcoin mines in Medicine Hat curtailed operations during Alberta grid alerts last weekend that called for reduced use to avoid rolling brownouts in the province during a record-setting cold snap.

Two operations – Hut 8 and the lesser known, much smaller, Modern Mining – told the News they reduced operations as power production throughout the province struggled to keep up with demand.

That led the Alberta Electrical System Operator to issue a rare message on the Emergency Alert system asking all Albertans to reduce use as much as possible.

A separate message was sent to large industrial and commercial customers – like Modern Mining – involved in a “demand response” program that compensates companies for shedding load at times of system stress.

Hut 8 however, dealt directly with the City of Medicine Hat utility, which officials said Monday was not facing local supply shortage issues.

Since it directs surplus power to the Alberta system however, the reduced local demand from the two sites – up to 40 megawatts, or 15 per cent of local power – resulted in more power sold to stabilize the Alberta grid.

Modern mining director Ryan Chernesky told the News that while his industry uses a lot of power, the high-tech computing sector provides fast-acting flexibility that can be used to maintain the grid in critical situations.

“Within 10 seconds of a message going out (from AESO) we can shut down,” he told the News on Monday. “High-power computing systems are really well suited because we can ramp up and down very quickly.”

The Calgary-based company, which has a facility in Medicine Hat, announced to some criticism on social media on Saturday night that it idled its 1.75-megawatt operation to allow more available power generation for residential use.

Despite some criticism online during the emergency alert, Chernesky said he feels the “demand response” program is tailor made for data-processors and could be a blueprint for better management of the power grid.

Managing demand is an alternative to managing supply, he said, and could benefit consumers and be easier and less costly than building more generation plants or battery infrastructure.

“Some people think that we’re out there stealing electricity and driving up prices,” he said. “Balancing out the grid leads to a more stable pricing, which is a benefit for all consumers.”

While Modern’s curtailment was directed by AESO, Hut 8 dealt directly with the city.

City managing director of energy, land and environment Rochelle Pancoast told the News the 10-year contract to supply 42 megawatts was developed in 2018 with local supply needs in mind, though many facets of the deal are kept confidential by both sides.

Critics have often questioned how the deal benefits the city or other users when so much power is blocked off.

“We realize that it can seem fuzzy for the community,” she told the News. “The original intention was always that the residential power need always comes first.”

The company’s operational update to investors for August alluded to a “mutually beneficial” nature of the contract clause, discussing how it was positioned to absorb record-setting prices on the Alberta power market.

“(The company) utilized mutually beneficial terms in the Electric Service Agreement covering its Medicine Hat site, which provides the opportunity for both parties to benefit from high prices in the Alberta power market while helping to stabilize the electrical grid,” read the note published on Sept. 12.

On Monday, the company told the News the sector is extremely responsive from a technical standpoint to act in time with demand spikes.

“Unlike other industries, miners can reduce their load – or power down – operations in just a few minutes to support the energy grid during weather events like the one that occurred over the weekend, when demand for additional energy spiked,” read a statement from Hut 8 vice-president of communications Erin Dermer.

She said company operations at Medicine Hat and another facility at Drumheller reduced energy use for the “vast majority” of the weekend.

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