Secret Canadian bitcoin mine facing $8 million fine for setting up without permission

Neighbours said the incessant noise was comparable to a plane engine warming up.
Neighbours said the incessant noise was comparable to a plane engine warming up. Photo credit: Getty Images

As bitcoin's value continues to appreciate over time, mining, the way people can acquire it without buying it, has increasingly become big business.

In 2010 a man paid 10,000 bitcoin for two pizzas, worth around NZ$60 at the time. Those same bitcoin are now worth $790 million, so dedicating resources to getting more can be incredibly lucrative.

That has seen historic power plants in the US transformed into giant mining operations, as well as school children earning a fortune during their school holidays.

But one mining operation in Alberta, Canada went a step further by opening up a huge operation at an unused natural gas well in Greystone Manor. It just didn't tell anyone, or get permission to do so.

That ended up with neighbours complaining about the incessant noise and operators Link Global facing a potential eight million dollar fine because of it.

Power plants can be set up without approval in Alberta - but only under certain conditions. Companies are only allowed to generate power for its own use and it's not allowed to have any negative impact on the environment.

That proved not to be the case here.

Jeff Kocuipchyk, a local resident, first started hearing the noises shortly after construction began last year but wasn't able to identify it.

"It differs every time the wind changes direction. It's just like a wave but it's 10 times louder and 100 times more annoying," Kocuipchyk told the Canadian Broadcasting Corporation.

"It's almost like a plane engine warming up on the tarmac. It's such a racket that none of my family could sleep."

The unexplained hums became a conversation piece among the neighbours, with some saying they couldn't open their windows because of the noise.

After Kocuipchyk investigated more he found Link Global had set up four 1.25MW gas generators at what the town thought was a defunct power station.

Instead, Link Global was using a dormant gas well there to power thousands of computer servers to mine, a process considered so energy intensive that experts have warned it could push climate change beyond the point of no return.

Earlier this year the Alberta Utility Commision's (AUC) enforcement team argued the site should be shut down because of the "seriousness and the potential for ongoing harm".

It also said the company had claimed an "extensive history" of consultation with locals but had provided no evidence of it.

Link Global argued against it, saying jobs would be lost, but it was ordered to halt mining in August, shutting down after a year of operation.

The AUC's enforcement team now says the company has to pay $2.3 million for the money it saved in electricity generation, and more than $5.7 million for the profits in mining bitcoin.

The AUC said it was only the second time such a penalty had been proposed, with a hearing to take place in November to confirm the fines and the values.

Link Global has an opportunity to respond before that hearing takes place and will be hoping to avoid the multi-million dollar bill.

In a statement CEO Stephen Jenkins said had followed the orders issued by the AUC and believed the proposed fine was "punitive".

"I apologise to our shareholders who do not deserve this. We will work tirelessly to ensure the outcome is positive."