WESTLOCK - With close to a half-dozen ‘Bitcoin mines’ currently operating in Westlock County, administration is promising new land-use bylaw regulations and a detailed report on them in mid-February.
County manager of planning and development Ted Traikovski told councillors at their Jan. 18 governance and priorities meeting that over the last couple of months his department has been “inundated and overloaded” with questions, concerns, complaints and even proposals and applications on Bitcoin mines. He went on to say that there’s currently five facilities operating in the municipality as they “pop up like dandelions” and noted they only became aware of the third, fourth and fifth ones Jan. 14.
“That’s how current and recent these were,” said Traikovski, noting they learned about the most-recent sites via an anonymous tip, a referral from the county’s enforcement branch and another from compliance monitoring. “This is very new for us and is nebulous and convoluted. We are one of the first counties along with Sturgeon County to deal with cryptocurrency mining in all of Alberta.”
According to a variety of cryptocurrency websites, Bitcoin mining is the process required to update the Bitcoin blockchain and through cryptography, miners use computing power to attempt to solve very complex mathematical problems that involve things called “hashes.” The solution to the problem is a function of the computing power held by the miner; the more computing power they have, the sooner they can find the correct solution.
Ultimately these mines, like the one announced last spring located by Hazel Bluff which is owned by Link Global Technologies, use generators fueled by dormant natural gas wells to run the computers that mine the currency — Traikovski told council that site is currently pending AUC enforcement proceedings.
Link Global also generated headlines in the fall when the AUC announced more than $7 million in penalties against the company for setting up sites in Sturgeon County and Kirkwall in Special Area 3 in southern Alberta without proper approvals.
Despite those astronomical fines, the payoff can be huge for miners as the first to find the correct solution earns the right to choose the transactions and add it on the next page of the ledger or, equivalently, the next block in the blockchain. As a reward for adding valid transactions to the blockchain, the miner earns 6.25 Bitcoin, as well as all the transaction fees in that block — the value of one Bitcoin as of Jan. 23 was $44,312.81.
Traikovski said he’s been in close contact with his counterpart at Sturgeon County so “instead of jumping off the cliff and building our wings on the way down” he viewed their new regs and will use it as a template — Sturgeon councillors were slated to debate their proposed bylaw changes Jan. 25. Traikovski was also clear saying the “road we do want to go down is to regulate these types of uses” and not abolish them.
“I believe our approach is prudent and it’s one we’ve gleaned a lot of information on from other regulatory bodies like the Alberta Utilities Commission and some of our neighbouring municipalities like Sturgeon County and some of the compliance monitoring agencies,” said Traikovski. “Yes, this a regulatory issue which would necessitate a land-use bylaw amendment to provide for that type of use to which Sturgeon County is calling ‘data processing facility.’ In planning terms we like to keep things vague because those change daily, monthly and yearly.”
Councillors were anxious to see the proposed regulations, with deputy reeve Ray Marquette saying they “need to be a leader, not a follower” on the issue. Councillors ultimately voted unanimously to direct administration to present a cryptocurrency report in relation to the land-use bylaw at the Feb. 15 GPC meeting.
“We need regulation here for the benefit of our residents. But I think there are a couple of different issues and I know planning and development will be working on these. One is regulation and the other is their compliance with the permitting process,” said Coun. Stuart Fox-Robinson. “I can tell you I deal with the Alberta Utilities Commission and I have spoken to their executive director of enforcement specifically around Bitcoin mining and they have huge issues there themselves. There is no real legislation here.”
