North Bay bitcoin operation shuttered over power bill dispute

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There was no response from Hut 8 if the facil­i­ty is com­plete­ly shut­tered or remains in an idled but main­tained state

Bit­coin min­ing oper­a­tions at a North Bay data cen­tre are sus­pend­ed due to a dis­pute between a cryp­tocur­ren­cy com­pa­ny and its ener­gy provider.

Hut 8 Min­ing reports oper­a­tions in the facil­i­ty have been shut­tered this win­ter stem­ming from a dis­agree­ment with Validus Pow­er on their pow­er sup­ply contract.

The issue between the two com­pa­nies has been brew­ing for some time, accord­ing to a string of news releas­es issued from Hut 8 since November.

Hut 8 and Validus had part­nered on bring­ing a moth­balled pow­er plant on High­way 11, north of the city, back to life by sign­ing a pow­er pur­chase agree­ment (PPA) in 2021. The for­mer Atlantic Pow­er plant ceased gen­er­at­ing in 2017 until acquired by Validus.

See: Bit­coin ‘Pow­er to Data’ project unveiled at idle North Bay pow­er plant

Now Hut 8 accus­es Validus of “breach­es of cer­tain oblig­a­tions” under the terms of that ener­gy con­tract. The two com­pa­nies have exchanged notices of default.

Read the news release here.

Two months ago, Hut 8 dis­closed it was issu­ing a notice of event of default to Validus, claim­ing Validus “failed to achieve cer­tain key oper­a­tional mile­stones” under the terms of the pow­er agreement.

These bit­coin data cen­tres con­sume huge amounts of elec­tric­i­ty to run and cool banks of high-pow­ered com­put­ers. In the last year, cryp­tocur­ren­cies like Hut 8 have grum­bled about fluc­tu­at­ing pow­er prices that have cut into bit­coin production.

In Hut 8’s third-quar­ter finan­cial results post­ed in ear­ly Novem­ber, the com­pa­ny claimed that Validus “demand­ed that the com­pa­ny (Hut 8) make pay­ments for deliv­ery of ener­gy that are high­er than those nego­ti­at­ed under the terms of the PPA,” and accused Validus of fail­ing “to meet its con­trac­tu­al oblig­a­tions under the PPA.”

Hut 8 said Validus has stopped sup­ply­ing pow­er to the North Bay facil­i­ty and deliv­ered a notice of event of default of their own, alleg­ing that Hut 8 failed to make cer­tain pay­ments relat­ed to the deliv­ery of ener­gy, an alle­ga­tion Hut 8 said it cat­e­gor­i­cal­ly denies. 

Hut 8 said it’s going the medi­a­tion route with Validus to reach a resolution.

There was no response from Hut 8 if the facil­i­ty is com­plete­ly shut­tered or remains in an idled but main­tained state.

The com­pa­ny also hasn’t respond­ed to how many jobs are impact­ed. Dur­ing a ground­break­ing cer­e­mo­ny in Octo­ber 2021, com­pa­ny offi­cials said there could be as many as 30 high-skilled tech­ni­cians employed.

In a recent online inter­view with Com­pass Min­ing, Sue Ennis, Hut’s vice-pres­i­dent of cor­po­rate devel­op­ment, said they “ulti­mate­ly plan” on reach­ing a res­o­lu­tion with Validus. “We hope to have a pos­i­tive outcome.”

But at the same time, Hut 8 has indi­cat­ed its back­up plan is to secure an alter­na­tive pow­er sup­pli­er, like­ly through the merg­er and acqui­si­tion path.

In an email response, Jesse Nick­el, Validus’ vice pres­i­dent of busi­ness devel­op­ment, said both par­ties are “active­ly engaged and col­lec­tive­ly pur­su­ing a resolution.”

“We are quite hope­ful we will reach a mutu­al­ly suc­cess­ful out­come, either at medi­a­tion or pri­or to. Hut has a strong vision and deep indus­try exper­tise and they’re a great part­ner to Validus Pow­er. We are opti­mistic and antic­i­pat­ing back to busi­ness as usu­al in due course.”

Mean­while, Validus main­tains big cryp­to­min­ing plans for its own.

The com­pa­ny has two data cen­tres under devel­op­ment in Kingston and Iro­quois Falls, the lat­ter involv­ing the use of a 120-megawatt nat­ur­al gas-fired gen­er­at­ing facil­i­ty not far from the planned data site. Validus pre­vi­ous­ly announced it was build­ing a data cen­tre in Kapuskas­ing, sup­plied by a local pow­er plant.

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