According to a report published in Bloomberg on Tuesday (4 September 2018), Ocean Falls, a small town on the Central Coast of Canadian province British Columbia that is only reachable by boat or seaplane, is betting its revival on Bitcoin mining.
Ocean Falls, which used to be a company town owned by Crown Zellerbach (which was an American pulp and paper conglomerate based in San Francisco), saw its population grow from 250 in 1912 (when the town's dam was built and the pulp/paper mill started operating) to around 3,500 in 1950.
Although low labor costs, inexpensive hydro power, and low infrastructure costs had made Ocean Falls mill a viable business in the first half of the 20th century, the town's very remote location, increasing labor costs, and the high cost of operating and maintaining the town made it an unattractive place for further investment, and by the early seventies, the mill had become uneconomical.
So, the mill's owner, Crown Zellerbach, decided to close the plant by March 1973. The British Columbia provincial government bought the town and mill for a very low price shortly before the closure of the mill, and kept it going until 1980. By 1990, only about 70 people (mainly loggers) remained. Today, although there is still a residential community, Ocean Falls is essentially a ghost town, and home to only a few dozen residents (with a seasonal population of up to 100).
The dam that powered the mill can still generate around 13 megawatts of electricity, some of which has been powering two nearby towns (Bella Bella and Shearwater). But there was still about a two-third capacity that was looking for new industrial uses.
Several years ago, the private utility company that owns the damn, Boralex, started getting calls from Bitcoin miners who were looking for a location with cool weather, a stable government, and cheap hydropower. These phone calls were routed to Brent Case, Boralex’s operations manager for British Columbia.
A lot of the crypto business people who approached Case had not done proper planning, and so did not impress him. However, Case, who was really looking "for a savior for the town", finally came across a Vancouver-based businessman named Kevin Day, who seemed to have a credible plan.
Case and Day have been working together for the past 2.5 years converting one floor of the old mill into a data center that could host a large amount of Bitcoin mining hardware (mostly, Bitmain's Antminer S9 units), and finally, this past July, Day "flipped on the first batch of servers."
Although Bitcoin mining is in town, this does not guarantee long term growth for the town (especially if the Bitcoin price does not dramatically go up and make Bitcoin mining more profitable) since such crypto mining facilities require very few local people to operate them and they "create little incentive for related businesses to locate nearby."
Although the Bitcoin price has come down from its high of almost $20,000 in December 2017 to around $7,000 today, fortunately for Day and the town of Ocean Falls, Day's company, Ocean Falls Blockchain, managed to secure a deal with Boralex (the dam's owner) that reportedly made it possible for the crypto mining firm to buy electricity at the heavily subsidized rate of only 4 cents per kWh (which is cheaper than almost everywhere in the world except Venezuela) for a five-year period.
Keith Cockell, an Ocean Falls native, told Bloomberg that even if the town's hoped-for revival does not materialize, he is glad that at least for now Bitcoin mining is helping to keep the dam's turbines running:
"There’s been a lot of years where we’ve been waiting for someone to come along... The day we fired up, the miners started going, there was the humming, and I said to Kevin, ‘It's a good feeling seeing that extra power being used.’”