Ever since the start of the COVID-19 pandemic, the popularity of cryptocurrencies has risen rapidly. Several governments and private firms have started to invest vast sums of capital in expanding the Cryptocurrency industry. However, it should also be noted that digital currencies are still not considered a medium of exchange in many economies. Overall, there is a negative response towards crypto. The Chinese Government, in the past few months, initiated a crackdown against bitcoin mining companies. This has led to a search for bitcoin to seek asylum elsewhere.
Presently, three natural gas production sites in Southern Alberta have shown a potential interest that would lead to the relocation of bitcoin mining machines from China. The proposal of the deal has been initiated by the Nevada Based Black Rock Petroleum Company. It has also been speculated that these plants can house up to 1 Million Crypto Currency Mining machines.
As per a press release issued by the Black Rock Petroleum Company, no date per se can be linked to the finalisation of the deal, however, the contract term for natural gas companies is stated to be 24 months.
Researcher and Economist Alex de Vries, the founder of the cryptocurrency analytics website Digiconomist, has stated that the relocation to Alberta would mean a multi-billion dollar investment using fossil fuels as the power source. This will also give a boost to Canadian crypto trading firms. However, Vries also argues that the consumption of fossil fuels to power the mining machines will increase the levels of CO2 emissions, which is the main reason the Chinese Government initiated the crackdown.
As per CoinMarketCap, on the 9th of August, a single bitcoin was worth more than $46000 US with a total market supply valued at more than $866 Billion.
Proposal Represents ⅓ of Global Mining Capacity
De Vries has stated that an estimated three million computers constitute the global bitcoin mining network. If the deal is finalised, Alberta would be housing one million such units, which would mean that Alberta will be operating one-third of the global mining capacity. In terms of allocating sites to the one million mining machines, Black Rock Petroleum Company has issued statements that the first 200,000 units of mining machines will be placed at the Quirk Creek Gas Plant, located near the South-Western hamlet Millarville, Alta.
At face value, the whole idea of shifting the mining machines to Alberta sounds excellent and innovative. However, Arvanaghi points out the potential issues that need to be addressed before relocating the mining machines. The first concern is that extensive land will be required to house the machines and a substation with access to high-speed internet connections. On top of that, many operators and technicians will be needed to operate these mining machines and ensure their timely maintenance. Given the plant’s location, it won’t be easy in terms of logistics to shift the mining machines to the site in Alberta, which happens to be located in a rural area. As per Arvanaghi, “Basically, there’s a lot of things that can go wrong with this.”
It should also be noted that the Quirk Creek Gas plant is under the management of Caledonian Midstream Corporation, a Calgary-based firm acquired by Black Rock back in early July. The President of Caledonian Charles Selby has stated that there have been arrangements made in an email, and the company has entered into a letter of intent with Black Rock.
Hurdles
De Vries has stated that to power the mining machines, the plant will have to allocate several power resources. De Vries argues that it would take approximately 10-30% of the total natural gas produced electricity production of entire Alberta to power them. Selby has also stated in a press release that at the present level of gas production, it is more feasible to house 10,000 miners instead of 200,000. However, the CEO of Black Rock (Nagy) states that additional generators will be placed to power the miners.
In addition, it should further be noted that additional power plants cannot be expanded without the approval of the Alberta Utilities Commission. Therefore, to enable the housing of miners, the acceptance of AUC will be needed. Nagy has stated that the company is “Looking into this matter”.
Moreover, the capital and revenue expenditure for setting up and operate such miners is costly as well. Finance Associate Professor Alfred Lehar of the University of Calgary states that it is difficult to know enough funds to finance the whole deal.
Lastly, to protect the overseas operators and engineers, the plant will also need to be issued strong security. This will further add to the financial cost as a trained and armed guard will also have to be hired.
Overall, the analysts represent a pessimistic picture of the whole deal and have highlighted all the red flags being ignored by the firm.
The post appeared first on Coinpedia
