City looking at possible deal with crypto mining company, may include greenhouse, seniors' housing: mayor

Flin Flon has, since its inception, been a mining town - just not quite like this.

City leadership is pursuing a deal with a Vancouver-based company to possibly host a large-scale cryptocurrency mining operation near Flin Flon - a deal that local leadership says could bring work, money and housing benefits if fulfilled.

The City has been in discussion with a Vancouver-based company called New Decade Energy, said Flin Flon Mayor George Fontaine, since last year. The Richmond, B.C.-based company approached the previous city council last year about possibly opening up an operation in the Flin Flon area and purchased a plot of land on Timber Lane from the City last September. Fontaine says he has met with representatives from New Decade about the project several times since he was elected last fall.

“This is a continuation of that - they had some basic conversations and they were made some promises. We got in touch with the same people, it continued,” said Fontaine.

The Reminder reached out to New Decade with a request for comment or information - no representative for the company responded to that request as of press time.

What it is

Cryptocurrency is a digital form of currency that does not have a physical form, such as a Canadian coin or bill, and does not rely on a central authority like a bank or government to issue it. Instead, cryptocurrency (crypto for short) relies on a decentralized computer network and uses a system of digital ledgers, software and transaction records to function in a similar way to minted, legal tender. Thousands of different cryptocurrencies are currently in operation online, some of which have market caps in the 10-figure range.

In order to produce crypto, computers must be used to mine it - in other words, using computing power to solve complex mathematical problems that generate coins that can then be spent. The more complicated the problem, the more coins it can produce - the more electricity needed to crack it and the more energy, in the form of heat, is released.

Possible benefits

New Decade and the City have discussed what a crypto mining operation in the Flin Flon area could look like, adding several unexpected benefits for the community. For instance, the excess heat from such an operation can be used in different ways - in the case of New Decade, an idea floated to Fontaine was to use the heat to power a massive greenhouse complex, producing large quantities of fresh vegetables both for Flin Flonners and to sell elsewhere.

“What they'd offered was to build 1 million square feet of greenhouse space and create an actual agriculture industry here in Flin Flon, where we could grow vegetables and ship them down to the rest of the province, because it'd be a lot more than we'd ever use,” Fontaine said.

The company had also told previous councillors that it would be willing to assist the City in its pursuit of building seniors’ housing - despite being a longstanding priority, the City has not built any units in several years.

“They had made an offer - they’d asked, ‘What would you like in this town?’ I think what the previous council had said was seniors’ housing, if a project was able to go through - that’s one of the things they were trying to garner land for,” Fontaine said.

Another way to use the heat would be to use it to warm the City’s water supply before treatment, saving the City money on heating its water - Fontaine said such a plan, especially during winter, could save the City large amounts of money in the long run. The heat could also be used to keep City facilities, like the community hall or Whitney Forum, warm in the winter, creating more possible savings.

“That's a huge difference in the winter time, because we spend close to a million dollars heating water. If we were able to get the majority of that taken care of by preheating, then you can see that some of the money that we're going to lose in our grant-in-lieu and things like that could be offset, not necessarily by money, but not having to spend the money of having the water heater,” he said.

“Let's say we could save a million dollars now. That's like earning a million dollars. That's a big deal.”

Roadblocks

There are hurdles needing to be cleared with the Flin Flon plan. First, the Manitoba government and Manitoba Hydro has had a moratorium on new connections to the provincial power grid for crypto operations since last November - the province has started a review of any impact crypto mining may have on Manitoba’s electricity grid. At the time of the announcement last November, Manitoba Hydro CEO Jay Grewal said that if every request made to the provincial utility by a crypto company had been approved, the province’s electrical load would jump up by 4,600 megawatts, pushing the limits of Hydro’s capacity. The New Decade project, according to Fontaine, would require 100 megawatts of power to operate, about 1.6 per cent of Manitoba Hydro’s total system capacity according to the Crown corporation.

New Decade and the City have kept their discussions quiet from the beginning, but chose to go public in an attempt to change the province’s policy.

“We were under an agreement with this company not to mention what they were doing or their name for a long time. We’d ask for permission to speak to politicians, because how could we try to help if we couldn’t speak to people?” Fontaine said.

“It’s gotten to the point, especially with the moratorium, when I discussed it with these people they said, ‘No, that's okay, let's go public. Let's explain to the people what it is we're doing.’ They have purchased land around here already, they have made significant investments already.”

Another hurdle is the market for crypto itself, which over the past several years has been highly volatile - in the past year, the world’s largest cryptocurrency, Bitcoin, hit a high of almost $60,000 per unit in March 2022, only to drop down to less than $23,000 per unit by the start of 2023.

Fontaine sees that volatility as only a slight problem for the City as the project is presented - little if any start-up cost would be paid by the City, while benefits to the project, if it goes ahead, could be felt community-wide.

“As long as it's something they can make money on, then go ahead. We had to take a look at this and say most of the things we talked about came at zero investment on our part. The loss was not ours, but we take a chance at a loss and maybe engineering fees and things like that, if we're trying to do some interesting things like to heat our pool, you know, with that kind of thing.

“We stand to lose some money that way, but we also stand to gain one hell of a lot more if we can make this work.”

Fontaine said that companies like New Decade have reached out to local governments across Manitoba, drawn in by the province’s sustainable and cheap electricity supply - amongst the least expensive in Canada.

“We've also been approached by other companies with a kind of a similar slant to them - they're out there. Whether we become chosen as a site or someone else does, they're going to go ahead eventually and do more of it,” he said.

“We would just like to be part of it and we'd like to benefit from it.”