Let the cryptocurrency and the natural gas flow, says Dale Nally, Minister of Service Alberta and Red Tape Reduction and MLA for Morinville — St. Albert.
From Nov. 13 to 18 Nally joined the Canadian Blockchain Consortium on a visit to Texas for the North American Blockchain Summit, an event studded with Republican superstars like Texas senator Ted Cruz and presidential hopeful Vivek Ramaswamy.
He came with a message:
“Alberta’s got low corporate taxes, reduced red tape, an educated young workforce, and our doors are open for business — that was a message that was landing well, with blockchain miners across North America,” he said.
And Alberta has another advantage over other jurisdictions, which often refuse cryptocurrency mining operations the right to set up shop due to the high energy demand mining places on electrical grids.
“We have thousands of orphaned and abandoned wells in this province, and many of them can be pressed back into business, generating royalties, and generating power for these blockchain miners,” Nally said.
Bitcoin and similar digital currencies use a decentralized network of computers to record virtual transactions. The process allows users to exchange digital currency (e.g. Bitcoin) out of view of banks or governments.
“Miners” use computers to solve puzzles that verify the transactions, earning them Bitcoin in the process.
However, as the digital record of these transactions grows larger, the “puzzles” that miners must solve become increasingly complex and energy-intensive.
Orphaned gas wells could supply power directly to buildings set up with computers dedicated to mining for cryptocurrency.
Last year Sturgeon County council gave the developments the go-ahead, with some restrictions. A company interested in setting up shop in Sturgeon County estimated that each facility would use 10 MW of power, create four jobs and generate roughly $19,740 in tax revenue a year.
Nally sees the idea as a win-win for industry and the environment.
Some processing facilities could use flare gas that is leaking from abandoned wells to power their operations. The heat generated by the mining stations could also be used in greenhouses, he said.
However, a report from Sturgeon County council found that allowing the facilities to hook up to gas wells would be inconsistent with the county’s guiding principle of environmental stewardship.
“While this type of development would allow for circular economic opportunities, it would also increase emissions,” the report said.
The county also heard complaints from residents about the noise generated by an unauthorized facility that started mining in 2020.
Blockchain operations are “actively having conversations,” about setting up shop in the province, but Nally could not point to a specific group due to “competitive and privacy reasons.”
“But they are very interested,” he said.
High-profile scams such as the fraudulent FTX cryptocurrency exchange have increased public wariness around crypto, and Nally said the risk of investing in untrustworthy operations was a big topic at the summit.
“Responsible blockchain operators would like to have regulatory compliance, a light touch, if you will, that would reassure residents that it's a safe environment to invest,” he said.
Newer blockchain methods do not require nearly as much energy, according to Alfred Lehar, a University of Calgary professor of finance at the Haskayne School of Business.
“The only blockchain left that does consume much energy is Bitcoin,” Lehar said.
However, Bitcoin mining could be a good fit for the province thanks to Alberta’s large energy supply, he said.
Lehar believes blockchain technology could potentially be useful for things like insurance contracts and land titles.
“[It would] save a lot in the economy,” he said.
It could also cut a lot of “back-office jobs” and save companies money.
There is a large startup scene in the blockchain space, with thousands researching new applications for the technology, according to Lehar.
“I think it’s important for Alberta to attract this startup space and really embrace this new technology in government regulations,” Lehar said. “If the government provides s safe and sound legal framework for these companies to operate and helps make a legal way to digitize assets and put them in a blockchain, then that would certainly help the technology development a lot and attract a lot of these startups to Alberta.”
Nally also visited arms, defence, aerospace and technology corporation Lockheed Martin and took a tour of their Fort Worth production facility.
The North American Blockchain Summit ran from Nov. 15-17 in Fort Worth, Texas.