Canadian Ghost Town Gets New Lease on Life with Crypto Mining

Ocean Falls, an almost abandoned community in the Great Bear Rainforest on the coast of Canada’s western province of British Columbia, is getting a new lease on life, thanks to cryptocurrency mining.

Most likely this is not the only such story, but it is fascinating. Bloomberg tells of Ocean Falls Blockchain, a company created by the Canadian entrepreneur Kevin Day, who set up shop in a remote place that is only accessible by water (seaplane and boat), has no grocery store, has a wet and cold climate, a post office, a bar that only works for a few hours, on some days of the week and between permanent 50-70 residents. But Ocean Falls has one huge advantage – lots of unused cheap electricity, generated by the town’s own dam, operated by Boralex.

The dam was built to power the paper mill that operated in Ocean Falls from the beginning of the 20th century until the early 1980s when the last operations shut down. Once a thriving town of around 5000 residents, with its own hospital and school, Ocean Falls was abandoned by most people and slowly fell in disrepair in a manner similar to many towns across the world that existed around a single industry. The few remaining residents are mainly older people who either did not leave or returned to retire in their hometown. According to the Central Coast Regional District website, in the summer the number of residents doubles to 150, with visitors attracted by the wild nature surrounding it.

Things, however, may change with the arrival of Ocean Falls Blockchain, which switched on the first crypto mining machines this July. The company got a very lucrative deal with the dam operator Boralex, who agreed to sell electricity at very low prices over a five-year period. Neither party is disclosing the exact price, but Day had told investors that it was less than 5 Canadian cents per kilowatt. Bloomberg quotes other crypto miners in the area as saying that Day is getting the electricity “practically for free”.

However, the future of Ocean Falls Blockchain may not look as bright and profitable as when Day put his plan to set up a crypto mining farm in motion. When he was making presentations for investors this February, he had made his projections on $11 000 for Bitcoin. Day had told investors that by the end of 2018 Ocean Falls Blockchain would be buying 6 megawatts of electricity and would have an annual revenue of around $5.7 million. The company had plans to increase its consumption to 20 megawatts and expand to nearby locations. Day had plans to have over 17,500 mining rigs by 2021 and use over 30 megawatts of electricity.

Nearly two months after switching on the first rigs, located in the most structurally stable building of the old paper mill, with the Bitcoin price hovering at around $7000 apiece, the operation uses less than a 1 megawatt. Day tells Bloomberg that he plans to increase the consumption by around 1.5 megawatts by the end of the year. It is not at all clear when and whether the figures penciled in at the beginning of 2018 would become a reality.

Also, it is not clear whether Ocean Falls Blockchain would continue to enjoy those extremely low electricity prices, as the provider Boralex is having a legal dispute with the local public utility BC Hydro over the prices it charges the neighboring town. This may result in regulators ordering Boralex to hike the prices for Ocean Falls Blockchain.

This practice is becoming increasingly common among utility providers. Just a few days ago the public utility district of Grant County in the state of Washington voted to hike the prices for “evolving-industry firms”, including crypto miners.

Yet Day remains optimistic and says he is certain the Bitcoin prices would go up again and that he has other plans beyond crypto mining.