Hello everyone, welcome to Hashop. I'm Hoda, Head of Operations at Encrypt Mining.
Hashop is a podcast dedicated to Bitcoin mining.
My goal is to give you a summary of the headlines, developments, and innovations in Bitcoin mining space.

In this episode, I sit down with Ben Harper to discuss the opportunity for Alberta to
become a hub for Bitcoin mining and its benefits for communities and oil and gas industry.

Hello Ben, thank you for joining me on this episode of Hashop.

Before we start, it would be great if you take a few minutes and introduce yourself
to the audience.


First of all, thanks Hoda, thanks so much for having me.
A pleasure to be on the Hashop podcast.
I've been listening since the first episode, so this is great to be a guest.
For your listeners, a little background on myself.
So I'm Ben Harper, Associate Director of Derivatives with Luxor Technologies.
For a little background on Luxor, we are a software and services company that helps Bitcoin miners across the globe optimize their operations and get their hashrate to market.
So we have our flagship mining pool, Luxor's Pool, which does about 3% of the network's
hashrate.
We also have a ASIC trading desk, which brokers ASIC hardware deals all across the globe.
We have a derivatives desk, which is where I sit and allows miners to sell forward and
hedge the volatility in their revenue and their hashrate that they're producing and
selling.
We also have a content site called Hashrate Index, which I encourage everybody to check out and are just in the early stages of releasing their own custom firmware as well.
So that's a little background on Luxor in terms of my own background.
Give everyone the full rundown.
I studied economics and finance in school, started my career in investment banking with
National Bank Financial in Toronto.
After that, did a stint at Columbia actually doing my master's of economics and then focused
on public policy for a few years.

So I worked briefly overseas in the Royal Court in Jordan and then as well for the government in here locally in Alberta for the finance minister, Mr. Taves and Premier Jason Kenney a couple of years back before we're joining Luxor.
So that's a little bit of background on me, on Luxor and what I'm up to.

And I guess what our conversation will end up being about is a little bit on the policy
and the mining side.

So you can see on my background is sort of the intersection of those two things.

Thank you for the introduction Ben.

Luxor is one of my favorite companies in this space.
You guys are one of the few companies that have tapped into every aspect of Bitcoin mining and innovations in this space and you guys are doing a great job.

So the reason I wanted us to have this conversation is that in the beginning of May, a white paper was published by Canadian Blockchain Consortium and Luxor called Roadmap for Alberta and Canada; Becoming a Global Leader in Digital Asset Mining.

I know that a lot of work and effort went into writing up this white paper and I wanted
you to come to this show and tell us what it's all about and what was the purpose of
writing the white paper?

So I joined Luxor back in 2022 and that's where the impetus sort of came and as your
listeners may or may not know, 2022 is a really challenging year for the economics of Bitcoin mining.
Of course, on the Bitcoin price side, on the hash rate increasing side and then on the
cost side with energy prices going up.

But the often less talked about one was the regulatory challenges and the regulatory headwinds that the industry had and that was felt very particularly especially here in Canada.
And so I think when you look around there, there is there are regulators, there are lawmakers that are a little wary of the industry.
Maybe they're a little misinformed about some of the potential negative parts of the
industry.
And, but there are also on the other side, there are some lawmakers that are positive.
So what does this background mean?
Well, there wasn't really a central place for the industry, particularly in Alberta,
in terms of if someone wanted to help the industry or how do we push it forward or how
do we sell the benefits and talk about our positive story instead of just maybe the negative spin that you hear in the news.
There was no real central place where the industry was on kind of one page, let's call
it physically and metaphorically.
And so the purpose of this was to kind of combat some of those misconceptions and negative views that some policymakers might have, but then also provide like recommendations and things like that for the lawmakers that want to help or want to encourage the industry.
And I think that's really important, right?
Because we as miners spend all day looking at our operations, how do we optimize them? You know, it seems very obvious to us what makes things better.
But you have to remember, you know, legislators, regulators, governments, they're looking not just at one industry, but all industries.
And so, you know, it's incumbent on us to really put together, you know, what is our
industry about?
What are the positive benefits and how can, you know, the government regulators understand and help find solutions for the industry, but also for, you know, society and their jurisdictions as a whole.
So that was really the purpose is to push back against some of the negative misinformation in the industry and talk about our positive benefits, but then also provide some recommendations and things like that for how we can improve a jurisdiction and make it more attractive for digital asset mining.

Well, that is awesome, and I know that everyone in the mining community in Alberta want this industry to grow. And that's why everyone is willing to put that effort and participate.

Now, why do you think Alberta can become a hub for Bitcoin mining?
What does this province have to offer to become the Canadian and global hub for Bitcoin mining?


Alberta has a lot of the characteristics for a natural kind of Bitcoin mining or even compute power hub.
And what Alberta has is one is an energy producing jurisdiction.
And that's key because as you know, energy is the main input.
Miners are looking for low priced, abundant energy anywhere in the world.
And Alberta is one of those places that has it.
So that makes it a very natural competitive place.
Compared to the rest of Canada, we also have a very competitive business jurisdiction,
right?
We have lower taxes than the rest of the country. We have taxes that are on the business side, competitive with any US state. We also have a forward thinking political environment.
We have a minister of red tape reduction. I know when we were down in Texas, that was something that companies love to hear, that there was a minister responsible for reducing, not just creating red tape like you have in other jurisdictions.
And then there's the people.
Of course, we have a highly skilled workforce, whether it's in the oil and gas, engineering
sectors, people that can do the jobs that the data center industry needs.
And finally, we have a cold climate. There are other jurisdictions like Texas and things like that that have all these things that I've named previously, but they also have the heat.
And as you know, these Bitcoin mining data centers run quite hot and you can add additional costs.
And so it's one of these things where being cold is actually good.
And you factor all these things together and Alberta can be quite a natural home for Bitcoin miners.
And we do find that actually, I know, it may not seem like we're quite the hot because
I think of the centralization of Texas, particularly with their grid interconnections and large companies.
But we have lots of small mining operations, mid-sized mining operations all across Alberta.
And I believe there's about 300 people employed across Alberta, which on a per capita basis puts us close to the employment levels you see in Texas now, of course, there are 25 million person jurisdictions.
So their absolute numbers are larger.
But in a per capita terms, there's no reason Alberta couldn't be a global leader in this sector.

And I agree to that.
Now the question is, you touched on this a bit, Ben.
The question is, what's the benefit for Albertans?
What can we get from being a hub for Bitcoin mining?


Yeah, so there's a number of benefits. They're really important.
And of course, with any relationship with any industry, it's not just about what they
bring or what you bring, it's about how the business community also grows the social fabric of the jurisdiction that it's in.
And in Alberta, what's the number one thing?
Jobs.
And like we said, there's 300 jobs this has created so far.
This is a new industry.
I know that's a small number now, but I expect that to grow quite a bit into the future.
That's 75% of those jobs are in world and remote regions.
So there's an economic diversification angle here that's really important for an oil producing jurisdiction like Alberta.
Our economy tends to go up and down with the price of oil.
This is an industry that A, uses a lot of the skills on the input side.
So it's a very natural kind of complement to the energy industry.
But also the profitability goes the other direction.
So it's a quantitative diversification instead of just some other industry.
Because as energy prices come down, your mining operation, your data center becomes more profitable because those are your represents your cost dropping as well.
So the economic diversification thing is huge as well as the job creation.
Then of course, international market access is a big, big issue.
It has been at least for my whole life in Alberta.
We're landlocked. We have trouble getting these abundant low cost energy resources to international markets.
The great thing about the data center industry about Bitcoin mining is our exports are done digitally.
We use the internet as a digital pipeline. And so we're able to export refined energy exports through compute commodities, hashrate in the case of Bitcoin mining.
We're able to export that through the internet, which really solves a problem that Alberta
has and is unique.
So we can move the opposite of oil and gas in terms of cyclicality.
And we can bypass the pipeline issue that Alberta has.
And then I think one of the biggest underappreciated benefits that Bitcoin mining brings is really the revolution in energy and environmental systems sustainability.
So Bitcoin mining has a few very peculiar but interesting characteristics that make
it a very interesting tool for optimizing energy systems.
So it can be located anywhere, like we said, as long as there's an internet connection.
But it's also completely flexible in that because it's a blockchain that's not centrally
operated, anybody can turn off and on their mining operations, their data centers at a
moment's notice.
And that allows Bitcoin miners to go in and take low price stranded energy basically anywhere that it exists in the world.
And once people that clicks for people, you start to realize the applications that are
out there.
This is a system that can help us balance our grids.
There's tremendous stress in the grids in terms of electricity usage going up and down
throughout the day, but also renewable generation, maybe generating at certain times, but not in others.
And so to have something on the demand side, on the user of electricity side that has that controllable flexibility, I mean, that's amazing in terms of what it can do in balancing the grid like we see in Texas.
Also incentivizing the build out of more renewables. Nobody wants to build a wind farm or a solar farm if while it's producing, energy prices are going negative.
This allows you to co-locate basically a price floor to your generation asset and make sure
that it's economical when you build it out. And that's just the on-grid side.
The off-grid side is I think even more important for Alberta because you can use this as a way to monetize maybe stranded wells that have gas on site that cannot be used and maybe is even being leaked into the atmosphere.
And so there's an angle where miners could help clean up those sites.
And so when you take a step back and you look at all these benefits, I think that there is tremendous benefit that this industry brings to, especially rural and remote regions, no
matter where it's located in the world, but particular benefits to Alberta, right?
Because of that economic diversification and because of that international market access that helps solve kind of our key problems here.

Well, those are great, right?
And we've seen what they've been able to achieve in Texas with all of the benefits that it
brings to the community use sector. Other cross industries that can be adjacent to Bitcoin mining.
But my question now is Ben, what's the solving us to get there?
What are the roadblocks?

Yeah.
So I think a lot of the pieces are in place and will kind of happen, I think, naturally because Alberta is such a natural fit for this industry. And I think that's a testament to kind of where we are now.
Because like I said, on per capita terms, Alberta does have a fairly good sized mining
community.
I think there are two key kind of roadblocks, right?
The first is the negative sentiment, I think, widely kind of felt by the industry.
And I think that's one on the crypto side and two on the energy side.
And so it's incumbent on us as an industry to get together and to make sure that we're
not just pushing back against those narratives, but also telling the positive story, right?
A lot of the things that I just mentioned aren't talked about a lot.
And so what gets coverage in the news, what people talk about is more the negative side.
And we just need to be talking more about the positives because they obviously far away
the benefits for any neutral observer.
And so it's about pushing back against that.
And then I think the other roadblock, right, is just what we're kind of solving for on
this white page is making sure everybody's kind of on the same page, right?
When we speak as an industry, when we're united in what helps or harms our industry, right?
When we have a unified voice and speak with a unified voice and do it in a committed,
diligent way, I think that we get results.
And so, you know, I don't think there's a ton, I don't think there's any wholesale,
you know, changes that really need to be made.
But I think that's good news, right?
Because I think we have a lot of natural advantages.
It's just about finding a way to kind of push them to push them forward.

That's great to hear.
We all want this promise to grow and we want the Bitcoin mining also to grow in this province because of everything that you just mentioned about the benefits and also all the potential that this province has.
But if you were to point to one single problem that we need to solve, I mean, educating the regulators and policymakers and the public, obviously, that's the first step to be kind
of to everyone has the positive view of this industry and the benefits that it brings,
right?
But what is the single biggest challenge that we need to solve?
And what's everyone's role in solving this problem? Equal miners, politicians, advocate groups, what can we all do to make this happen?

Yeah.
So, I mean, when you look on the policy side, right, I don't know if there's one big issue,
but there definitely are some large ones that need to be addressed.
One of the biggest issues your listeners might not be aware is a tax issue that sits with
the federal government, you know, whereby the federal government is looking to designate crypto mining non-commercial activity so that miners are unable to recuperate their input, sales tax credits that any other export sector would be able to recuperate.
You know, that's one issue.
You know, another issue is the challenging on-grid economics, I think, in Alberta.
So in terms of I think Alberta is a very competitive off-grid jurisdiction because of all the partnerships with energy sectors and things like that. The electricity prices on the Alberta grid are not globally competitive.
And so that will take more work on the Alberta side and is also a larger than our industry
issue.
You know, I don't want to get too much into the politics of it, but there were some decisions made years back that made Alberta's electricity quite high, sorry, high priced and so less attractive for the on-grid side of things.
And so what needs to be done?
Well, we need to continue being on the same page of groups like the Canadian Blockchain Consortium and sustaining those efforts.
Like I said, the government regulators, they look at every industry, right?
We spend 100% of our time looking at this industry. They spend, you know, a fraction.
And so it's incumbent on us to be speaking as a group and for a consistent sustained
year after year basis, right?
And so they haven't seen that from us yet, right?
They think we're, you know, maybe we're something new.
Maybe it's a fad.
Maybe it's going to go away.
We both know that that's not the case.
We both know this industry is here to stay.
And so it's about demonstrating that, hey, you know, we're a real serious industry. We're maturing.
We're acting like other industries.
You know, we have real responsible operators in here and there's things that we can do.
And I always go back to the industry, right?
It's incumbent on us because, you know, this is our livelihoods.
This is our industry.
You know, everybody else has other things to worry about.
And so, you know, if we're not the ones behind the initiatives, if we're not the ones showing up every day, then nobody will do it.
And so I really think, I think the ingredients are there.
I think there are some, obviously some roadblocks and some, you know, regulatory agencies or in some lawmakers across the, you know, I think across the country, there's a little more pushback, but I just think time, I just think diligence.
That's what's worked really well in the jurisdictions that have attracted this industry.
They are very organized.
They're very professional.
And I think, you know, we're building that in Alberta.
And I think the longer this goes on, I think we go start to bear fruits because, you know,
ultimately we have a tremendous amount of value to bring to places like Alberta and
places like Canada that are energy rich producing jurisdictions.
It's just a matter of being sustained and being diligent and continuing to talk about
the benefits of our industry.
Because if we don't, who will, right?

That's true.
Now, so what is the next step for this, for this white paper?
Have you been able to communicate with some of the regulation regulators and like policymakers so far?


Yes.
So, I mean, the communication all happens through the Canadian blockchain consortium, right?
So, you know, I was involved in, you know, the input and the drafting and things like
that.
I do know that the paper has gone to the government and relevant regulatory agencies.
So, awaiting on a response, I know the initial feedback that at least I've heard has been
positive.
And so, you know, next steps are, like I said, continuing those dialogues, continuing those conversations.
I think the Canadian blockchain consortium has been a great vehicle for this, for our
industry.
They have great connections and relationships with people in governments, not only in Alberta, but across Canada and in the relevant regulatory agencies.
So I think Ball is kind of in their court on the policy side, but at least, you know,
now we are in at least a united front in terms of a clear set of things that could help encourage this industry that are out there.

The next, I know the next event I'll be at is the Canadian job blockchain consortium
is hosting a stampede event. I don't know if I'm jumping the gun announcing it, but I think Kalea has sent out some invitations
and things like that.
So I think that'll be a great opportunity for us as an industry, one to teach, showcase,
what are we, not just to the government, but to the energy industry, right?
As you know, like one of the big troubles since the crash in the price of Bitcoin is bringing capital into the industry.
And that's been a focus of miners.
And I think the natural place in Alberta for that capital to come from is the energy industry, right?
They have the excess power, they have the low cost power, and we have a customer for
that power.
And I think it's just about having those conversations.
And I think that in Alberta, the best time to do some business development is during
stampede, and it sounds like the Canadian blockchain consortium is going to make mining kind of the centerpiece of that event.
So I'm excited.
I'll be there.
Our CEO, Ethan from Luxor will be there as well as some other members from our team.
So I think for our industry, that's the next place to go.
Let's get some people from the energy sector, from the government, from around the world, and let's show them what mining in Alberta is all about.


Well, that's great.
And we know that lots of people from different industries attend stampede, and making a presencemdefinitely helps getting our name out there.
And you might know that Texas Blockchain Council did something similar.
They attended NAID, one of the biggest oil and gas shows in North America.
And I believe attending such cross-industry events helped showcasing the benefits of the coin mining.

My next question is, how do you see this white paper evolve?
What do you think needs to be added to this roadmap to become a holistic view of the bitcoin mining industry, its benefits for the province and adjacent industries like the oil and gas and energy?
And in general, how do you see this roadmap evolve in the future?

I think the white paper is really a first step.
And I think the way that I think about this is Canada should really be a global superpower
in this industry, particularly on the per capita side of things.
Fun fact, of all the G20 countries, Canada produces the most electricity by far.
If I remember correctly, it's 30% more than the second highest producing which is the
United States and 150% more electricity per capita than the G20 average.
So we should really cross country be a force.
Now the problem is that we've had some really negative policies.
Like I mentioned earlier, at the national level with this tax issue to claim miners are non-commercial activity, which is ridiculous and costly.
But then also at the provincial level with particular provinces, utilities that came
on moratoriums on new grid interconnections, in particular British Columbia, Manitoba,
Quebec, Newfoundland, and then in Ontario, an exclusion of crypto miners from ICI, which is a demand response program.
And so where does this go?
I think like a lot of things go in this country, which is Alberta kind of stepping out, taking
the lead, welcoming new innovations and new sectors, and then the rest of the country
kind of following suit.
And so I think there's tons of recommendations and tons of things to keep us busy here in Alberta, on the urban side, but also the industry side, right?
The white paper has recommendations, not just for the government, but also for the industry and things that we can do.
But I think where it goes from here is it's about expanding this across the country.
Alberta might be one player here where we're making some progress on good policy and
welcoming the industry and seeing people see the positive impacts.
So hopefully this can start to kind of turn the tide of it.
2022 is a dark year for policy. So in Canada for miners, so hopefully this can be a starting document for the rest of
the country to go, hmm, maybe this isn't quite what we thought it was.
And there's something more here.
And we're realizing that we're missing out on something new and exciting and really valuable to our economy and our society as a whole.
So I hope that the recommendations help us here in Alberta, but where it's really needed
is the rest of the country where regulators, lawmakers have taken a much more negative
view of the industry, which is unfortunate.


And I think that's a great next step.
And we would love to see that happen across the country.
Well, I think this is it, Ben.
It's been great.
Thanks for being on the show.
If you have any final words to the audience, please go ahead.

Thank you so much.
Like I said, big fan of the podcast and really, really thankful that you had me on here.
If you want to learn more about Luxor, I guess, visit us at luxor.tech and then hashrateindex.com
if you're looking for any Bitcoin mining news is how you find us.
But Oda, thank you so much.
This has been an absolute pleasure.

Thank you, Ben.

Thanks for listening to this episode of Hashop.
I would love to hear your feedback on the topics I discussed here.
Please reach out to me and let me know your thoughts and comments.
Until the next episode, keep the hash up.
Thank you.