Is the digital asset sector poised to be the trendsetter of tomorrow, yet questioning whether Alberta is prepared to embrace it in the here and now?
Alberta Courts Its Place as a Global Hub for Digital Assets
The western Canadian province of Alberta is aiming to become a leading destination for the digital asset industry, despite mixed opinions on its readiness for such a move. Last year, Technology Minister Nate Glubish unveiled a strategy with the goal of attracting $100 billion worth of artificial intelligence (AI) data centers to the province over the next five years.
While the burgeoning sector offers an opportunity for Alberta to diversify its natural gas market, critics point to a perceived lack of a comprehensive plan to address the anticipated increase in demand. The digital asset industry encompasses blockchain, cryptocurrency mining, and data centers, which require substantial electricity to power their intricate computing systems.
In December 2023, the Royal Bank of Canada's Climate Action Institute released a report estimating that if all proposed data centers in Canada at the time were approved, they would account for 14% of the country's total power needs by 2030. A United Nations University study published in the Earth's Future journal revealed that global Bitcoin mining alone consumed over 173 terawatt-hours between 2020 and 2021, surpassing the energy consumption of most countries.
In Alberta, the digital asset sector is primarily fueled by natural gas and is already well underway. According to Invest Alberta, data centers in the province generated approximately $1.3 billion in revenue in 2023, reflecting an annual growth rate of 7.7% since 2018. Notable industry projects include the $2.8-billion, 1.4-gigawatt Wonder Valley AI data center in Grande Prairie, touted as the world's largest, and five 400-megawatt Beacon AI centers across the province, with one near Calgary estimated to cost $4 billion.
Furthermore, a US$120-million, 101-megawatt Bitcoin mining center is planned in Fox Creek, operated by global data center giant Bitdeer. According to consulting firm TwelveSix Services, this facility would become Canada's largest crypto mining center. Blake Fikowski, with TwelveSix Services, cited Alberta's deregulated energy system and cheap natural gas as key factors in the province's appeal to digital asset companies.
One benefit of the relationship between the province and digital asset companies is increased revenue for energy producers, who can sell their natural gas directly to the data centers instead of through pipelines. Fikowski explained the process: "You're going to take the natural gas, convert it into electricity, utilize that electricity for computing power, and sell your gas on site."
The digital asset sector's substantial electricity requirements have led to concerns about grid capacity and affordability in other jurisdictions, prompting some to place restrictions on the industry. In 2021, China imposed a ban on cryptocurrency mining due to environmental, financial, and consumer protection concerns, while Russia has also outlawed the practice in energy-scarce regions.
British Columbia and Manitoba paused new connections for crypto mines in 2022 due to questions about the economic return of the energy-intensive practice, and New Brunswick followed suit the following year. However, Fikowski believes that Alberta can address these concerns by utilizing its stranded gas assets to generate the electricity needed by the data centers. According to him, these companies could even boost electricity supply during periods when the grid is under strain.
Despite these advantages, Nathan Ip, Alberta NDP shadow minister for technology and innovation, highlights the need for a solid plan to integrate the digital asset industry into the province's energy landscape before inviting investors. Ip noted that there has been a lack of clear communication from the United Conservative Party government on how the industry will coexist with the province's existing energy needs.
Similarly, Rural Municipalities of Alberta president Kara Westerlund calls for more clarity regarding the rules governing digital asset development, citing concerns about noise, sustainable development, land use, and competition with existing industries. These issues have arisen due to the rapid pace at which the industry is evolving, with Westerlund noting that policy development has struggled to keep pace.
The Alberta Utilities Commission and the Alberta Energy Regulator have not provided figures on the number of crypto mines or data centers currently operating in the province, as they do not oversee or regulate the sector. Glubish's office did not specify how the province plans to monitor digital asset companies, but stated that data centers must comply with all provincial rules and regulations, including the Water Act, the Environmental Protection and Enhancement Act, and the Emissions Reduction Regulation where applicable.
For Ip, the case of the Sturgeon Lake Cree Nation, which sent an open letter to the premier in January to express concerns about the Wonder Valley AI center's water and land impacts, demonstrates a lack of consultation with Indigenous communities. Ip claims the government's approach has been to "put the cart before the horse," announcing projects without properly addressing concerns from affected parties.
The Rural Municipalities of Alberta, like Ip, seeks a seat at the table in shaping the digital asset industry's development, arguing that careful planning and regulation are essential to protect communities and ensure shared benefits. The province stated it is developing a Blockchain Roadmap to guide the sector's growth, with a focus on balancing industry growth with affordability and reliability for all consumers.
According to global management firm McKinsey and Company, the AI boom could more than triple global demand for data center capacity by 2030, making Alberta's ambitions understandable. However, balancing rapid industry growth with grid reliability and consumer affordability will require ongoing policy development and strategic investments in infrastructure.
- The digital asset industry, which includes blockchain, cryptocurrency mining, and data centers, poses a significant challenge to the climate due to its substantial electricity requirements, as shown by a United Nations University study and a report from the Royal Bank of Canada's Climate Action Institute.
- While the digital asset sector in Alberta offers an opportunity for the province to diversify its oil and gas economy, it also raises concerns about grid capacity and affordability, leading some jurisdictions to place restrictions on the industry.
- Alberta, with its deregulated energy system and cheap natural gas, is appealing to digital asset companies, as seen by the planned US$120-million Bitcoin mining center in Fox Creek and the $2.8-billion Wonder Valley AI data center in Grande Prairie.
- As the digital asset sector grows, there is a need for comprehensive plans and regulations to address environmental impacts, land use, noise, and competition with existing industries, as well as clear communication between the government and different stakeholders, including Indigenous communities.
