July 17, 2018

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Opinion

Marketing Manitoba's low energy costs

Dreamstime / TNS FILES</p><p>Interest in cryptocurrency mining has grown since the spike in Bitcoin values.</p></p>

Dreamstime / TNS FILES

Interest in cryptocurrency mining has grown since the spike in Bitcoin values.

Hey there, time traveller!
This article was published 3/1/2018 (194 days ago), so information in it may no longer be current.

Over the years, varying efforts have been made to market Manitoba based on its low electricity rates from Manitoba Hydro’s non-fossil-fuel-burning hydro generating stations.

There are a couple of big fertilizer and chemical plants in the province that otherwise could have located anywhere that are here, presumably because of those low rates. But it’s hard to point to other wins that were directly a result of low hydro rates.

When the realization began to emerge a decade or so ago about what it takes to store the enormous amounts of digital data the world is now amassing, there was some tire-kicking about building large server farms here.

But nothing materialized and billion-dollar server-farm developments are now dotting the U.S. Midwest, for instance.

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We hope you have enjoyed your trial! To continue reading, we recommend our Read Now Pay Later membership. Simply add a form of payment and pay only 27¢ per article.

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Thank you for supporting the journalism that our community needs!

Hey there, time traveller!
This article was published 3/1/2018 (194 days ago), so information in it may no longer be current.

Over the years, varying efforts have been made to market Manitoba based on its low electricity rates from Manitoba Hydro’s non-fossil-fuel-burning hydro generating stations.

There are a couple of big fertilizer and chemical plants in the province that otherwise could have located anywhere that are here, presumably because of those low rates. But it’s hard to point to other wins that were directly a result of low hydro rates.

When the realization began to emerge a decade or so ago about what it takes to store the enormous amounts of digital data the world is now amassing, there was some tire-kicking about building large server farms here.

But nothing materialized and billion-dollar server-farm developments are now dotting the U.S. Midwest, for instance.

More recently, especially since the outrageous spike in Bitcoin values, there has been a global scramble to develop cryptocurrency-mining operations that require massive amounts of computing power and equally massive amounts of power to cool the equipment.

You don’t need to be a research scientist (or an expert in data mining for that matter) to realize Manitoba has some of the lowest electricity rates in the world.

That street-level market intelligence is fuelling an intense burst of interest in Manitoba from providers of the processes required to establish and manage the heavily encrypted blockchain technology that underpins the Bitcoin and cryptocurrency markets.

Winnipeg has held its own as the digital economy develops, even with its location a little off the beaten track of the clearly established hubs in the sector. Maybe this Bitcoin mining sector might be the thing that would provide the convergence of established infrastructure — bountiful low-cost hydroelectricity — with new market demand.

It’s definitely generating a lot of busy-making activity for real estate professionals and staffers at Manitoba Hydro.

But as Ryan Behie, executive vice-president and managing director of the Winnipeg office of global real estate firm CBRE, said it’s still too early to tell how serious the inquiries are.

"You don’t know how serious the interest is until the rubber hits the road," he said. "And the rubber has not really hit the road yet."

CBRE and many other industry professionals have been showing a growing list of interested parties from around the world possible locations for cryptocurrency-mining operations in and around Winnipeg.

The problem is, while the electrical rates are cheap, the fact is there are not many suitable locations currently unoccupied that are serviced with the electrical loads the users are looking for.

Diane Gray, the CEO of CentrePort, would like nothing better than to welcome an anchor tenant to the 20,000-acre inland port industrial park. In addition to notching a greenfield win, it might set the stage for others to follow if the infrastructure was in place that can deliver massive power loads to neighbouring tenants as well.

Bruce Owen, a spokesman for Manitoba Hydro, said the Crown corporation has fielded about 50 inquiries over the last little while. But it’s complicated. Manitoba Hydro will bear some of the costs of establishing the transmission and delivery infrastructure necessary, but it wants to be careful it does not end up with stranded assets.

Then there is the economic development issue.

Hydro might be more or less inclined to build out the capacity for an interested potential client if the ensuing business would contribute to economic growth for the region.

And it’s not clear that these enterprises — as attractive as they may seem, what with their connection to this vaguely glamorous international currency — are necessarily as lucrative a proposition as they seem.

A Vancouver company called Atlas Cloud Enterprises Inc. recently purchased a building in Washington state and announced a fundamental change to its business operation, by committing full bore to the blockchain cryptocurrency mining business.

The building it acquired is close to the Grand Coulee Dam and can satisfy Atlas’s energy consumption needs of three megawatts of power with the ability to upgrade to five megawatts. (For example, the recently completed Wuskwatim station near Thompson generates 200 megawatts of power.)

But to get itself going in the blockchain business it only took Atlas $300,000 to buy the building and it expects to spend a relatively modest $2.6 million to build out the data centre.

Dayna Spiring, the head of Economic Development Winnipeg, is loathe to turn anyone away.

"We have to play to our advantages and one of our advantages is that we do have low-cost power," she said.

It’s an exciting opportunity that’s suddenly emerged, but it’s probably not likely that Bitcoin mining is going to replace the importance of pork production to the Manitoba economy any time soon.

martin.cash@freepress.mb.ca

Martin Cash

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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