The BC Court of Appeal has dismissed a Prince George forest products company’s challenge of the BC NDP cabinet’s 2022 moratorium on powering new cryptocurrency mines.
Conifex Timber Inc. failed to overturn the decision in BC Supreme Court last year.
“The appeal is not moot, as it addresses a controversy that could have practical implications for Conifex’s pending electrical service requests,” ruled the tribunal. “On the merits, Conifex has not established that the (order in council) was outside the scope of the (cabinet) regulation-making authority.”
The March 3 decision, written by Justice Paul Riley and concurred by Justices Margot Fleming and Lauri Ann Fenlon, came after a one-day, Nov. 25 hearing that also named BC Hydro as a respondent.
The tribunal said that the proposed Conifex projects would use almost half the projected energy output from the new, $16 billion Site C Dam. Therefore, it was reasonable for cabinet to conclude it had the authority to order a pause in delivery of service to cryptocurrency operations, “based on cost-of-service and economic concerns tied to their distinctive electrical consumption characteristics.”
It was also not unreasonable for cabinet to issue an order directing the BC Utilities Commission (BCUC) to exercise its power to relieve BC Hydro of its obligation to provide service to new or pending cryptocurrency mines, despite the requirement for the BCUC to “hold a hearing before independently exercising that statutory power.”
Conifex applied in April 2021 to BC Hydro for three megawatts (MW) of service, with a potential to expand to 25 MW, in Mackenzie. It also envisioned similar projects at Kennedy Creek, Salmon Valley and Ashton Creek.
Conifex later abandoned the Kennedy Creek plan, but submitted applications for Salmon Valley and Ashton Creek in April 2022, proposing to operate each site to 150 MW. In June 2022, it entered into system impact study agreements that required BC Hydro to complete necessary reports by the end of April 2023 and then proceed to the impact study phase.
But BC Hydro was flooded with requests to power cryptocurrency mines. The Crown corporation became concerned that it would be forced to increase electricity rates for all customers and lose the ability to meet future power demand while achieving government-imposed objectives to transition away from fossil fuels.
So cabinet directed BCUC to pause new and pending electrical service applications for crypto mining for 18 months. It specified four projects, including Conifex’s (HPC) performance computing sites in Salmon Valley and Ashton Creek.
BC Supreme Court heard Conifex’s petition over two days in October 2023 and dismissed the case in February 2024. On the last day of the spring Legislature session in May 2024, the NDP government enacted the Energy Statutes Amendment Act which authorized cabinet to regulate provision of electrical service for crypto mining.
By the end of June 2024, the 18-month moratorium elapsed. But, on the same day, cabinet issued the Cryptocurrency Power Regulation that said BC Hydro must not supply service to certain cryptocurrency projects, including Conifex’s Salmon Valley and Ashton Creek sites, for a further 18 months.
The Court of Appeal decision said Conifex “intends to pivot away” from proposed crypto mining to offer HPC services to clients in the artificial intelligence and machine learning industries. It advised BC Hydro of this move last May, after the BC Supreme Court decision.
“Conifex says this change in end use does not affect the particulars of its interconnection requests for the Salmon Valley and Ashton Creek HPC Sites, which should be allowed to proceed through the BC Hydro interconnection process without further delay,” said the Court of Appeal.
Conifex, publicly traded on the TSX, has a corporate office in Vancouver, a regional office in Prince George and sawmill and power plant operations in Mackenzie.
