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Medicine Hat utility partners with cryptocurrency ‘miners’

Warren Frey
Medicine Hat utility partners with cryptocurrency ‘miners’
CITY OF MEDICINE HAT — Hut 8, a cryptocurrency mining company, has embarked on a $100-million project with the City of Medicine Hat, Alta. to install its data mining servers next to one of the city’s power generating turbines (above). Medicine Hat runs its own utility company, drawing on vast natural gas reserves in the region.

Medicine Hat is using an ancient energy source to power a digital project on the leading edge.

Hut 8 Mining Corp., a cryptocurrency data mining firm, recently entered into an agreement with the City of Medicine Hat, Alta. for the supply of 42 megawatts of electric energy, along with a land lease for a data mining facility located next to the city’s new Unit 16 power plant.

The City of Medicine Hat is itself the utility provider, thanks to vast natural gas reserves that have supplied the energy needs of residents since 1903.

In 1910, the Medicine Hat Electric Utility began generating power for residents.

“The facility will be right next to one of our gasified generating plants. There are no line losses since it will be right next door,” said Medicine Hat Mayor Ted Clugston.

The gas turbine, a General Electric LM6000, is “basically a jet engine,” he said. “We have four or five around Medicine Hat.”

According to a news release from Hut 8, the company will invest approximately $100 million in construction, starting immediately. Building of the facility is anticipated to be complete by the third quarter of 2018.

“Hut 8 resources will also be used to improve infrastructure to the area surrounding the data centre site and in the funding of technology programs and grants in local educational institutions to ensure that the local job force has the skills needed to participate in this new industry,” the release stated. 

Using the land near the power supply for 57 data centres makes more sense for Hut 8 than using a building, Clugston said.

“They’re custom built for the project, rather than renting a warehouse where you would need HVAC,” he said.

The area will also be modified to better accommodate the data centres.

“We’re levelling the land, putting in concrete and raising them up for better air circulation,” Clugston said.

Cryptocurrency is a digital asset that uses peer-to-peer cryptography to secure transactions. Control of the currency works through a blockchain, an encrypted transaction database that acts as a ledger. Mining, the role of the Hut 8 servers, validates the transactions and in return for the processing receives a “reward” or small cut from the exchange.

“I had to get my head around the concept of ‘mining,’” Clugston said.

He added the operation is “agnostic” to the fluctuating price of Bitcoin and can be used for other forms of data crunching.

“The signing of the electricity supply agreement and the land lease represents a key component in achieving our business plan for the roll-out of our BlockBox Data Centers in low-cost energy jurisdictions,” said Hut 8 board chair Bill Tai.

“The City of Medicine Hat offers stable cost-competitive utility rates and has been very welcoming and supportive of Hut 8’s fast paced growth plans. We’re excited to work with the City of Medicine Hat to introduce a new industry, with new revenue channels for the city and its residents.”

In addition to Medicine Hat, Hut 8 has a similar smaller scale project with 17 data centres operating in Drumheller, Alta., with another project planned for Quebec.

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