Crypto miner seeks to export US electricity for Canadian servers

In what has been called "a maiden effort by an energy-hungry cryptocurrency-mining industry to import electricity from the United States to Canada to meet its significant power demands", a Canadian company has applied to the U.S. Department of Energy for authority to export power from the U.S. into Canada to power blockchain-related computer servers -- but a nonprofit advocacy group has warned that federal approval of this "first-ever application to export power by a cryptocurrency miner" may result in a rush of similar applications.

Under U.S. federal law, the Department of Energy regulates exports of electricity from the United States to a foreign country, which require authorization under section 202(e) of the Federal Power Act. On May 21, 2020, DMG Blockchain Solutions Inc. filed an application with the U.S. Department of Energy, seeking authority under the Federal Power Act to transmit electric energy from the United States to Canada for a term of five years.

According to the website dmgblockchain.com, "DMG is a diversified cryptocurrency and blockchain platform company that is focused on the two primary opportunities in the sector – mining public blockchains and applying permissioned blockchain technology. DMG focuses on mining bitcoin, providing hosting services for industrial mining clients, earning revenues from block rewards and transaction fees, developing data analytics and forensic software products, working with auditors, law firms, and law enforcement to provide technical expertise, DMG’s permissioned blockchain technology is focused on developing enterprise software for the supply chain management of controlled products."

DMG's application to the Department of Energy describes the company as "a consumer of power, whose primary business is to host servers whose primary function is to ensure the security of public blockchains as well as other high-performance computing applications." DMG's application notes, "This business requires large amounts of power, which DMG is currently consuming approximately 15 megawatts on a steady load basis and has plans to grow to up to 60 megawatts in the next year with potentially larger amounts in the future as DMG may add new facilities." The application requests DOE export authorization over any of a long list of cross-border transmission facilities with Presidential Permits, in states including Maine, Vermont, New York, Pennsylvania, Michigan, Minnesota, North Dakota, Montana, and Washington.

But at least one entity has weighed in to urge the Department of Energy to proceed with caution, as it considers this request to export electricity to power foreign blockchain servers and computers. A Motion to Intervene and Comment filed with the Department of Energy on June 25, 2020, by watchdog organization Public Citizen, Inc. frames that organization's concern:

Despite cryptocurrency mining’s status as a relatively immature industry, its alarming power consumption footprint raises concerns about its sustainability and suitability in localized power markets, resulting in moratoria on new cryptocurrency mining operations issued by select U.S. utility districts and government agencies.

Citing language in Section 202(e) of the Federal Power Act requiring applications to export electricity to neither “impair the sufficiency of electric supply within the United States” nor “impede the coordination in the public interest of facilities subject to the jurisdiction of the Commission", Public Citizen commented:

Cryptocurrency mining is extraordinarily energy-intensive and can lead to major strains on local U.S. power supplies. At the same time, the process of mining is designed in a manner that wastes the overwhelming majority of the energy it consumes. U.S. cryptocurrency miners are struggling to meet their own power demands. This appears to be the first-ever application to export power by a cryptocurrency miner, and approval may result in a rush of similar applications.

Public Citizen's comments assert that this "maiden effort by an energy-hungry cryptocurrency-mining industry to import electricity from the United States to Canada to meet its significant power demands... raises serious, potentially fatal concerns under section 202(e)." Public Citizen concludes that the Department should proceed with extreme caution and "likely should deny the application or, if granting it, place conditions on it."

The pending export authorization proceeding before the U.S. Department of Energy is OE Docket No. EA-482, DMG Blockchain Solutions Inc. Application To Export Electric Energy.