A Bitcoin Mining Operation Started a Secret Power Plant, It Did Not Go as Planned

A Bitcoin Mining Operation Started a Secret Power Plant, It Did Not Go as Planned
Photo: Federico Parra, Getty Images

A There Will Be Blood-style drama unfolds in Canada, where a Bitcoin mining operation illegally tapped an unused natural gas well near a wealthy neighbourhood in Alberta. The company Link Global might have gotten away with pilfering gas, if not for noise complaints from area hot tub owners. This story has everything.

According to a CBC News report from August, Greystone Manner residents began suffering an annoying noise that is “like a plane engine warming up on the tarmac” last fall.

“We have a hot tub in the back,” one person told CBC News, complaining about the aeroplane-like sound disturbing the peace. “There’s a premium you pay for this kind of place,” they added.

The neighbours convened, CBC News reports, and discovered that Link Global had not notified anyone, not even the public utility commission or the well’s owner Maga Energy. Taking without telling the owner — stealing, in other words. Now the Alberta Utilities Commission is reportedly pursuing a $7.7 million (AUD) fine for revenues from electricity and bitcoin as well as penalties. It found that the company operated two under-the-radar power plants, one for 426 days.

The secret energy plants reportedly powered four 1.25 MW generators, enough to power roughly 6,000 homes in Texas. Or, consuming roughly 7,400 cubic feet of natural gas per hour, each.

Bitcoin mining consumes massive and constantly intensifying volumes of power because (to over-simplify), mining bitcoin is a race to solve a complex mathematical problem; whoever’s high-powered machinery solves the problem first gets a block of 6.25 bitcoins. Therefore any estimate of power-per-bitcoin will be rough, but the New York Times currently calculates that mining one would consume enough energy to power an average household for nine years.

Power theft isn’t new to the industry. Earlier this year, Ukrainian authorities reportedly raided a mine accused of siphoning power right from the grid. A similar report comes from England, and one involves Malaysian law enforcement steamrolling over 1,000 machines after discovering their owners had stolen around $2.75 (AUD) million of electricity.

In an email, Link Global CEO Stephen Jenkins told Gizmodo that this is pretty normal, and the secret-borrowing part was just a side effect of navigating a difficult regulatory landscape. “We run on abandoned gas sites and have been working with the utilities commission to bring them into compliance,” Jenkins said, adding that compliance has been “our main challenge as bitcoin mining is new to the energy regulatory framework and going first can be hard sometimes.” He said the company has “learned a lot” and will apply those lessons in the future.

The Alberta Utilities Commission was not immediately available for comment, but CBC News reports that the AUC isn’t buying it. In a submission last month, the AUC enforcement team accused Link Global of “willful disregard for the existence of regulatory requirements.”

A hearing will commence in November.