So-called “bitcoin miners” operating without permission just north of Edmonton have been told to stop their environmentally unfriendly and, it turns out, noisy activity – for now.
A company called Link Global Technologies Inc. last year set up four natural-gas powered generators near an upscale estate community in Sturgeon County to power a “bitcoin mining” operation, the CBC reported yesterday.
Much to the dismay of their well-heeled neighbours, who were never notified of the Vancouver-based company’s plans, the noisy generators were soon running day and night, journalist Sarah Rieger wrote.
Global was using a dormant natural gas well owned by Calgary-based MAGA Energy Ltd. to power the generators. And, yes, MAGA really does stand for “Make Alberta Great Again,” although that’s probably coincidental to this story.
It turned out Global hadn’t sought the permission of the provincial utilities commission either, giving the neighbours grounds to have the noisy operation shut down. The bad news for the estate dwellers, Ms. Rieger’s report indicates, is that if Global jumps through the right hoops, it may be able to start its generators up again.
We could probably come up with more clear-cut examples of still technically legal industrial activities that are more anti-social than “bitcoin mining” – say, demolishing a mountain to create an open-pit coal mine on the Eastern Slopes of the Rockies.
But there are obviously serious problems with the idea of running generators night and day to power banks of computers to mysteriously create digital currencies like Bitcoin whose boosters claim they are an alternative to conventional national currencies, supposedly free of government control.
That’s pish-posh, of course. As economist Jim Stanford explains, “to serve as money, an asset must have three key attributes: a unit of account, a store of value and acceptance as payment in exchange.” Cryptocurrencies have none of those qualities, he wrote recently in the Toronto Star.
“Canadian Tire bucks are closer to true money than cryptocurrencies,” Dr. Stanford said. “And the only people who genuinely use cryptocurrencies to finance exchanges are gangsters and tax evaders.”
Nobel Prize-winning economist Paul Krugman, who writes a regular column for the New York Times, summarizes the wild claims made by cryptocurrency enthusiasts as “libertarian derp plus technobabble.”
“Almost the only time we hear about them being used as a means of payment,” Dr. Krugman wrote in the Times, “is in association with illegal activity, like money laundering. …”
But according to Dr. Stanford, “the most repugnant aspect of cryptocurrencies” is their enormous energy drain. “Bitcoin mining alone uses up more electricity each year than a medium-sized country (like Norway or Argentina),” he said. “Even trading a single bitcoin needs enormous electricity to power the massive calculations needed to keep the transaction untraceable.”
“This ultimately pointless activity adds twice as much to carbon pollution as Canada’s entire mining and petroleum industry,” he noted.
All this to generate something that carries all the financial and moral risks of any speculative bubble without the nominal value that resides in, say, real estate, gold, great masters paintings or tulips – all associated with past financial bubbles, but each of which has a useful or at least decorative alternative purpose.
Speaking of speculative bubbles, PayPal founding CEO Bill Harris called cryptocurrencies “a colossal ‘pump and dump scheme’” – wherein scamsters pump their overvalued securities and dump them on suckers before the market wises up. “Bitcoin is a scam,” he wrote in Vox. “A bitcoin has no value at all.” It’s “best suited for one use: Criminal activity.”
Dr. Stanford, Dr. Krugman and Mr. Harris all suggest it’s time for national governments to regulate cryptocurrencies like Bitcoin to protect ordinary investors.
There’s certainly no way we should be encouraging this “industry” to set up shop in Alberta.
So what is our United Conservative Party Government doing? Well, it’s worrisome that they don’t seem to hate the idea.
Black Rock Petroleum Co. put out a news release in July touting the idea of relocating from China “up to one million bit miners” (processing computers, that is) to be “deployed” at three old natural gas wells in Alberta in response to a crackdown on cryptocurrency miners by the Chinese government.
The CBC found an Alberta Environment and Parks spokesperson who said the province is “encouraged that we continue to attract new investments from around the globe that support a diversified economy.”
Remember, the UCP is run by people who have almost never seen a bad idea they didn’t love.
They’re also desperately looking for a way to put off having to clean up dirty old fossil fuel wells whose owners would like to walk away from the liability, not to mention finding a way to prove there’s still some life left in the fossil fuel industry.
Repurposing old gas wells as power sources for bitcoin mines might just appeal to such a mentality.
Meanwhile, it’s mildly ironic that folks living on rural estates – not exactly the most environmentally friendly form of abode with its long commutes, expensive infrastructure, low tax contributions and relatively high carbon footprint – have been the ones to put a stop to a bitcoin mining operation in Edmonton’s doorstep.