Calgary-based Iron Bridge Resources Inc. has launched a wholly-owned cryptocurrency mining and hosting subsidiary, called Iron Chain Technology Corp. (ICT), that will own and operate cryptocurrency mining datacentres at its oil and gas field sites.
Amid slumping natural gas prices the company, which generates electricity from its own natural gas production, said it would benefit from some of the lowest cost power in the world.
“We burn it with our own generators and use that power to fire the cyptocurrency mining operation,” Rob Colcleugh, Iron Bridge Resources chief executive officer, told JWN. “We essentially have almost no cost for our power.”
Surplus supplies and pipeline takeaway restrictions have led to AECO prices that trade in the $1.50 per GJ range in the futures market.
“Essentially we are getting next to nothing for our gas. I started looking at power opportunities and this [opportunity] came out of that examination,” Colcleugh said.
The company will mine its own cryptocurrencies—including bitcoin, litecoin and soon ethereum—as well as host platforms for third-party mining equipment.
ICT expects to begin operating its pilot cryptocurrency mining facility near Iron Bridge Resources’ oil and gas operations at Elmworth, Alberta. ICT is already mining with equipment sourced and assembled by technology professionals who have been engaged by the company—IT systems architects who the company said have experience assembling mining equipment and profitably mining cryptocurrencies.
The pilot project will involve a very modest initial capex investment as a result of its ability to leverage existing infrastructure and excess power generation. The pilot currently has access to approximately 700 kilowatts of low cost power with the ability to expand quickly.
Iron Bridge Resources currently produces about 2,000 barrels of oil equivalent per day, enough natural gas to power a 45 megawatt facility, and expects to significantly increase that gas production within the next two months when it brings on stream additional Montney production.
ICT is also in discussions with other natural gas producers to work with them on future commercial projects and said it is interested in pursuing industrial scale hosting opportunities.
However oil and gas production will remain the company’s number one business with cryptocurrency mining a sideline, said Colcleugh. “If [mining] grows beyond our own gas production volumes we would look to spin it off. This is simply a way to enhance our natural gas netbacks, which we were getting very little for before,” he said.