Company fined for unlicensed bitcoin mining operation in Brazeau County

The commission says the company entered into an agreement with Response Energy to use gas from a previously suspended well to power 87 mines in addition to the well’s operation. Response had suspended the well after closing the pipeline that connected it to its gathering system.

The two companies consulted with local residents and conducted what they felt were adequate environmental assessments, including with regard to noise levels.

But on Feb. 15, when the plant started operating, the company immediately started getting noise complaints, say the documents. Straw bales were stacked to absorb the sound, but the commission began receiving complaints on March 8.

An investigator later found noise levels exceeded guidelines. Energy Sustain Services was not charged with those violations because it wasn’t clear whether the noise came from the generator or the bitcoin miners.

Alberta law says generators smaller than one megawatt that supply power to a single user don’t require regulatory approval.

The plant’s capacity was almost 1.5 megawatts. Its electricity was used by both companies.

“(Energy Sustain Services) erroneously believed that the power plant fell under the small power plant exemption,” the commission wrote.

“These are not the sort of mistakes (i.e., the reasonable belief in a mistaken fact) that would ground the defence of due diligence.”

The generator has since been replaced by a low-noise machine with about one-third the capacity.

Commission spokesman Geoff Scotton said the fine shows the regulator’s enforcement system is effective.

“The (commission) takes this role seriously and has an established compliance and enforcement division to facilitate this aspect of its mandate,” he said in an email. The (commission’s) powers around investigations and compliance and enforcement generally are substantial.”

The fine levied against Energy Sustain Services is a small fraction of those previously handed out by the commission.

In February, Avex Energy was fined more than $240,000 for running a natural gas-fired generator in the County of Stettler in central Alberta while bypassing regulatory tests for safe and unobtrusive operation.

In December, Vancouver-based Green Block Mining reached a settlement agreement of more than $400,000 for running five megawatts of generation in Sturgeon County west of Edmonton. It was also ordered to never operate in Alberta again.

In both cases, the power was being sold to bitcoin miners, which require large amounts of electricity to run their computer servers.

Scotton said it’s difficult to know how many unlicensed power plants in Alberta have been supplying bitcoin miners because the commission’s enforcement division doesn’t necessarily track where the power involved in its investigations goes.

“Anecdotally, I am aware of only a handful of these over the last two or three years,” he wrote.

This report by The Canadian Press was first published May 9, 2024.