The business of cryptocurrency mining continues to be a hot topic of interest in the Alberta regulatory arena. While the Alberta Utilities Commission (AUC) retains primary jurisdiction over bitcoin mining and the construction and operation of power plants in the province, the Alberta Energy Regulator has recently published Bulletin 2022-12, requesting information related to current or future cryptocurrency mining operations associated with AER-regulated sites.
The Alberta Energy Regulator ("AER") regulates energy resource activities in Alberta, including the development of oil, oil sands, natural gas, and coal resources. Many AER-regulated activities produce energy for cryptocurrency mining operations, which may affect a regulated parties' compliance with certain AER directives. In particular, cryptocurrency mining operations that consume gas produced by AER-regulated activities are considered consumers, even if the operation is owned or operated by the same entity that is producing the gas. As a result, when gas is produced by AER-regulated activities for cryptocurrency mining operations, the AER-regulated party must ensure that the gas is measured and reported as sales gas and that royalties are paid on the gas volumes delivered to cryptocurrency mining operations.
AER-regulated parties must also adhere to applicable spacing requirements, including the location of flame type equipment, exhausts, or sources of ignitable vapours relative to third-party activities on site. If an incident occurs with cryptocurrency mining equipment or infrastructure that affects or has the potential to affect AER-regulated oil and gas activities, AER-regulated parties must notify the AER.
Further, dispositions to conduct AER-regulated activities on public land are specific to those activities. Any additional activities require their own dispositions, even if being carried out near or at the same location as an AER-regulated activity.
Based on the recent influx of interest in setting up cryptocurrency mining operations in Alberta, the AER is seeking to better understand the relationship between AER regulated activities and cryptocurrency mining operations in order to manage potential risks and ensure compliance and overall safety of AER regulated operations.
The AER is therefore requiring that licensees provide certain information with respect to current or future cryptocurrency mining operations by May 20, 2022, including:
- Surface location;
- Licence Number;
- Size in kilowatts per hour;
- Status (operating, planned, or inactive); and
- Energy Source.
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