The CEO of Hut 8 Mining Corp. recently set up his company in the self-proclaimed ‘dinosaur capital of the world’, Drumheller, because its cheap electricity rates give him the biggest margins for his Bitcoin mining business.
The cryptocurrency boom is pushing Canadian companies to join the global rush to find the cheapest sources of energy as computing competition drives power demands higher, resulting in crypto hotspots cropping up in communities like Drumheller, Winnipeg and Montreal.
“Because electricity is our highest cost, we become energy hunters,” CEO Clark said. “We find the cheapest sources of energy, put a container down, plug it in and start mining.”
Access to cheap energy is crucial because Bitcoin miners around the world are competing to solve the equations that feed into the blockchain that supports the currency.
The more computing power miners throw at the system, the better their chances of being rewarded with Bitcoin, said Clark.
Thanks to the abundance of cheap natural gas and lower-than-expected demand growth, Alberta power prices are some of the cheapest around. Clark said he’s getting electricity at about three cents per kilowatt hour.
Should prices rise, the company would simply put the 12-metre containers that hold its data centres on 18-wheelers and roll them to the next-cheapest energy spot, he said.
The competition in Bitcoin mining has increased considerably as it and other cryptocurrencies have seen huge price gains in the past year — trading as high as US$19,000 in December — putting an end to the early days when mining could be done on a laptop.
A typical laptop might be able to make about 40 calculations a second, whereas the 1.1-megawatt containers supplied by Hut 8’s partner Bitfury can handle 7.5 quadrillion calculations per second. The company expects to have about 60 megawatts of installed capacity by the end of the year.
The demand for computing and electrical power has led smaller previously pure-play energy companies to add cryptocurrency mining to the mix.
Read more about this developing market on Edmonton Journal.