Company that had 3 secret cryptocurrency mines must pay $400K, cease operations in Alberta

7 Min Read

A Vancouver company has been ordered to pay more than $400,000 in penalties and legal expenses for having multiple unsanctioned cryptocurrency mines in Alberta. The Alberta Utilities Commission investigated Green Block Mining after residents in 10 households complained about noise from a natural gas plant near Greystone Manor, a neighbourhood in Sturgeon County, north of Edmonton. The commission discovered the company, formerly known as Link Global, had set up four 1.25-megawatt gas generators on the site, powering computer servers that were mining digital currency. It also learned that the company had two other plants — one in southern Alberta’s Special Area 3 and another in Westlock County, north of Edmonton. According to the AUC, all of the power plants have been shut down since 2021. “Because the plants in question were not permitted to operate while the proceeding was ongoing, Albertans were protected from the consequences of Green Block’s non-compliance,” the commission told CBC News in an email on Tuesday. The AUC approved a settlement agreement between the commission’s independent enforcement staff and the company in December. The agreement stipulates that Green Block must pay administrative penalties of $346,500, which will go to the province’s general revenue fund, plus $60,000 in legal expenses for the commission’s enforcement staff. The company has agreed to cease operations in Alberta and never operate in the province. “It’s good to see they end up paying a penalty and I think the government should go after anybody who sets up any illegal operations,” said Alfred Lehar, a professor at the University of Calgary’s Haskayne School of Business. Lehar, who specializes in cryptocurrency and corporate finance, said most bitcoin mining companies in the industry follow the rules, and that this case is an outlier. Larger penalty initially proposed The commission initially proposed Green Block pay more than $7 million. The AUC’s enforcement team alleged the company had received a significant economic benefit by not following the rules, but according to financial records included in an affidavit filed this fall from the company’s director, Kevin Ma, Green Block appeared to be in a precarious financial position. Ma’s affidavit also stated that the company was never engaged in bitcoin mining at any facility in Alberta, either on its own or as part of any co-mining arrangement with any other entity, the AUC said in its decision. The AUC says its enforcement staff had originally estimated the economic benefit based on limited, publicly available information but came to better understand the corporate structure of the groups operating the facilities. Unsubmitted documents According to the commission, the company has not yet produced its audited financial statements, which are necessary to determine how much it benefited from operations. The company’s unfinalized financial statements show total revenues of $1.4 million in 2020 and $520,164 in 2021. Submitting the statements is a requirement of the settlement agreement. The commission can start a new proceeding against the company if the audited statements differ from the unfinalized ones. Green Block has also been under a cease-trade order from the British Columbia Securities Commission since July 2022. According to the order, the company did not file required documents, including its audited financial statements for 2021. Nigel Bankes, a retired law professor at the University of Calgary who was not involved in the case but read the commission’s recent decisions, said he would be surprised if the AUC starts a new proceeding against the company. “This doesn’t seem to be a particularly stable financial company,” he said in an interview. Bankes said the AUC was also running out of time to conclude the proceedings, since there is a three-year limitation period under the Alberta Utilities Commission Act. Payment deadline extended Green Block was ordered to pay the fines within 30 days of the Dec. 21 decision. The company has paid for the legal expenses and made a partial payment of $140,000 to the provincial government’s general revenue fund. But Green Block told the commission the company not currently solvent and raising money in B.C. to pay a regulatory fine in Alberta has been difficult. This week the commission extended the payment deadline to Feb. 21. Gavin Fitch, the company’s lawyer, told CBC in an emailed statement that Green Block intends to pay the remainder of the penalty and “looks forward to putting this matter behind it.” Fitch said the company “has accepted that it made mistakes with respect to its Alberta operations” and did not profit from its business in the province. More mines coming? Proponents of bitcoin mining, like Lehar, say the industry could bring more jobs to Alberta, where there is cheap power and numerous abandoned oil and gas sites. But critics have raised concerns about bitcoin mining’s environmental impact and some provinces have restricted new cryptocurrency mining projects over concerns about the amount of electricity they use. Sturgeon County, where one of Green Block’s unapproved plants was located, decided to allow cryptocurrency mining, with restrictions, in 2022. The county told CBC News a small number of companies have expressed interest in operating cryptocurrency mines on oil and gas sites, but no permits have been issued. The AUC says it’s aware of other crypto facilities associated with power plants but does not track approvals.

Share This Article
By admin
test bio
Leave a comment