N.B. Power hits pause on large new electricity customers during crypto review

N.B. Power says a freeze on servicing new, large-scale industrial customers in the province remains in place over concerns that the cryptocurrency sector's heavy use of electricity could be more than the utility can handle.

The Higgs government quietly endorsed the moratorium in a cabinet order in March 2022 and ordered a review of how the sector might affect the reliable supply of electricity.

The cabinet order, filed with the Energy and Utilities Board, said N.B. Power had "policy, technical and operation concerns about [its] capacity to service the anticipated additional load demand" from crypto mines.

It said the utility had received "several new large-scale, short-notice service requests" to supply electricity to crypto mining companies that could put "significant pressure" on the existing supply of electricity.

The order, signed by Premier Blaine Higgs, said non-crypto companies shouldn't be subject to the pause for any longer than required for the review.

The review was due Dec. 31, but N.B. Power refused to provide a copy to CBC News.

"We cannot share the report as it was provided to Executive Council in confidence," said spokesperson Dominique Couture.

The freeze was ordered just months after Taal Distributed Information Technologies Inc. announced plans to establish a 50-megawatt bitcoin mining and transaction processing operation in Grand Falls.

A town official said this week that deal never went ahead.

24 hours a day

The Taal facility would have joined an existing, 70-megawatt bitcoin mine in Grand Falls operated by Hive Blockchain Technologies.

Hive's bitcoin mine is made up of four large warehouses containing thousands of computers that run 24 hours a day trying to earn units of the cryptocurrency.

The combined annual electricity consumption of the two mines would exceed what could be produced by the small modular nuclear reactor being designed by ARC Clean Energy Canada of Saint John.

Put another way, the two mines would gobble up more than three months' worth of electricity from N.B. Power's coal-fired Belledune generating station.

No one from Taal responded to interview requests from CBC News.

"We are proud to operate in New Brunswick. Hive's operations near Grand Falls predate the moratorium, so we are unaffected," Hive CEO Aydin Kilic said in a statement Friday.

CBC also asked Higgs's office for a copy of the review and an interview but there was no response.

The pause comes at a time when N.B. Power is confronting a series of interconnected challenges about its long-term ability to generate electricity.

N.B. Power must stop burning coal at Belledune by 2030 under federal climate rules.

It's having problems running the Point Lepreau nuclear generating station, and it must decide soon whether to spend $3 billion to refurbish the Mactaquac hydro dam.

The utility has been exploring other energy sources for Belledune but so far has not made a decision, and converting the plant could be costly.

Utility officials told a committee of MLAs recently that the province faced an all-time record peak demand on Feb. 4 that left it on the verge of not being able to supply existing customers.

"It's a trend. We're going to set peak-demand records on a regular basis as we go forward," chief nuclear engineer Andy Hayward said.

"We're going to attract more population to the province. We're going to attract industry to the province. The demand's going to go up."

ARC Clean Energy said in February its first 100-megawatt SMR will be ready to install at Point Lepreau by 2030, but that won't generate enough power to fill the gap left by Belledune.

Another SMR developer, Moltex Energy Canada, is working on a 300-megawatt reactor but said it won't be ready in time for 2030.

In 2021, Kilic told CBC News that the 70-megawatt power consumption of the company's New Brunswick bitcoin mine was the equivalent of powering 7,000 homes. 

Michelle Robichaud, president of the Atlantica Centre for Energy, an industry-funded research centre, didn't want to comment on cryptocurrency mining but said the Hive and Taal energy consumption did not seem like a big burden on the grid.

"It doesn't necessarily go up or down. It's a nice consistent level," she said. "I would think that that is not a huge addition to the system." 

J.D. Irving Ltd., the utility's largest customer, "voluntarily and proactively" scaled back its Saint John paper mill operations that weekend, and last July, to avoid higher electricity costs due to peak demand, said its vice-president of communications Anne McInerny.

Under the Electricity Act, N.B. Power must provide its customers with "equitable access" to electricity but must also ensure the "reliability" of the system.

Bitcoin is a digital form of money that has risen in value and popularity around the globe in the last decade.

It operates without a central banking system, with transactions tallied on a digital ledger called a blockchain. 

Bitcoin mines act as a decentralized banking network, constantly recording worldwide transactions and earning bitcoin as a reward.

The more computers a company operates to tally transactions, the more currency it will earn, but adding computers requires larger amounts of electricity.

N.B. Power has been forced to run its carbon-emitting plants more than usual in recent years due to Lepreau's problems.

Some U.S. electrical utilities supplying crypto mines have been forced to pass on higher costs of generation to other customers and, in some cases, have had to generate more electricity from greenhouse-gas emitting sources. 

Kilic said in 2021 that one reason the company set up shop in Grand Falls is that the colder climate allows it to ventilate the warehouses and keep the computers cool without air conditioning — which would consume even more electricity.