Medicine Hat signs $80m deal to mine bitcoins

The city of Medicine Hat in the Canadian province of Alberta has signed a US$80m deal to supply electricity and lease land for a cryptocurrency mine.

The currency will be created by the Hut 8 Mining Corporation, which describes itself as the largest miner of cryptocurrencies in the world. The electricity will be supplied by the city’s Unit 16 gas-fired power plant, which was opened in November last year.

Bill Tai, the chairman of Hut 8 (pictured), said in a press statement: "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 Centres in low-cost energy jurisdictions.

"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."

The operation is expected to be running by September and will triple the Hut 8’s operating power to almost 61MW, or enough power to run a city of about 100,000 people.

Hut 8 chairman and venture capitalist Bill Tai (YouTube)

Hut 8’s existing operation, in the town of Drumheller, consists of shipping containers stuffed with computers. It is supplied with about 19MW of power, and has so far mined 750 bitcoins, with a value of about US$5m, on current prices.

The mining of cryptocurrencies depends on running large numbers of computers in parallel, and the profitability of the operation depends on access to electricity at a cost that is below the value of the currency "mined". Cryptocurrency operations such as Hut 8 are attracted to locations that offer cheap energy: Siberia and Iceland have been named as destinations in the past.  

Ted Clugston, the mayor of Medicine Hat, said the deal was part of the city’s efforts to diversify its economy. "We’ve made economic development a huge priority down here because we were hit very, very hard by the oil and gas decline.

"Really we’re just turning gas into electricity and they’re taking that electricity and turning it into ones and zeroes."

Image: Medicine Hat’s Unit 16 gas turbine plant (City of Medicine Hat)

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