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North Bay bitcoin operation shuttered over power bill dispute

Soaring energy prices send Hut 8 Mining and Validus Power to mediation
North Bay data centre (Validus Power)

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 in signing a power purchase agreement (PPA) in 2021. The former Atlantic Power plant ceased generating in 2017 until acquired by Validus.

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.

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. Validus 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 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.