Western Standard - Digital pipelines

00:00:00.000 Okay, well, coming again from the floor of the Global Energy Show here in Calgary, and

00:00:16.780 I'm joined by Scott Johnson of Digital Shovel.

00:00:21.180 It's not all just oil, gas, machines, equipment, things like that.

00:00:25.380 There's other people in attendance, other presenters.

00:00:27.980 And as far as energy goes, I mean, it's something quite unique and new that you guys are working

00:00:33.400 on, which is, I guess, digital currency mining.

00:00:35.780 Can you explain how that ties into an energy show?

00:00:38.060 Yeah, we like to refer to it as a digital pipeline.

00:00:42.540 And the reality is it's not super new.

00:00:44.240 I mean, some of our earlier customers in 2018 were doing that, where you've got stranded

00:00:48.560 gas or associated gas that is not worth compressing and trucking or running a pipe in a gathering

00:00:54.840 system, but you still want to generate some revenue off of it.

00:00:57.120 But marrying that with a Bitcoin mining farm, generating power on site, and then basically

00:01:03.300 digitally converting that natural gas right into money on site is a great way to capitalize

00:01:08.220 on what would otherwise be a liability.

00:01:10.400 Yeah.

00:01:10.600 So, I mean, mining digital currency, some people might not necessarily understand that, but

00:01:14.720 it basically takes some really heavy-duty computing power.

00:01:17.300 It's energy intensive.

00:01:19.200 And one of the things people, I guess, have been critical of is that you can draw energy

00:01:22.520 from the grid where other people need it.

00:01:23.880 But when you're talking about isolated gas deposits that you're using, this is energy

00:01:27.360 that wouldn't have been utilized otherwise anyways.

00:01:28.960 They're stranded deposits.

00:01:30.340 Yeah.

00:01:30.620 I mean, two important parts that you touched on there.

00:01:32.840 One, when we got into the industry, there were clients that had generators and just hooked

00:01:38.580 them up to load banks.

00:01:39.460 They were just heating the outdoors.

00:01:40.780 So they were just doing that to deal with the natural gas so that they could take the

00:01:44.280 oil because they weren't able to flare for a prolonged period of time.

00:01:48.000 And it was a no-brainer for them.

00:01:49.940 They already had the generator there and they were just burning the heat into the night sky.

00:01:53.340 On the grid side of it, though, it's a common misconception.

00:01:57.560 Like when it first started, yeah, we just ran 100% of the time, all the time.

00:02:01.280 Now what happens is most Bitcoin miners are curtailing loads.

00:02:04.400 So they're consuming power when there's idle capacity.

00:02:06.940 But then when the peak comes up and everybody's AC is on or industry is using a lot of gas,

00:02:11.980 Bitcoin miners will turn off and they don't have that impact.

00:02:14.780 In fact, in many regions, they've actually helped to lower power prices by utilizing that

00:02:19.280 underutilized capacity, which brings down the price for consumers as a whole.

00:02:24.380 Okay.

00:02:24.820 So, yeah, I mean, you're more of a demand power with gas and so on.

00:02:28.200 But, I mean, in hydro areas and things like that, then using those other capacity times

00:02:31.680 is just a more efficient use of the generation.

00:02:34.740 But you talk about containerized.

00:02:36.480 And so this is kind of a portable ability to mine as well?

00:02:39.220 Like these operations can be set up in different areas and moved?

00:02:42.780 Yeah, they're completely modular.

00:02:44.180 The solution, we started with big 40-foot shipping containers.

00:02:46.580 We now make a modular unit that will actually fit inside of a shipping container or can fit

00:02:51.240 on the back of a flatbed truck.

00:02:52.720 You can move them around with a 5,000-pound forklift or a skid steer.

00:02:56.600 They don't require any foundation.

00:02:58.260 Same way you would set down a portable generator or a pump jack or something like that, you can

00:03:01.700 put this down right at a wellhead, take the natural gas, convert.

00:03:05.640 And if, for whatever reason, it doesn't make sense at that site any longer, you can pick

00:03:09.620 up and move it to another one.

00:03:10.560 It's not like a permanent data center that's an immovable object.

00:03:13.620 Okay.

00:03:13.860 So this isn't just conceptual.

00:03:15.100 You guys are already in operation.

00:03:17.020 Is this happening in Alberta right now?

00:03:18.960 Yeah, we have approximately 50 units in Alberta.

00:03:22.100 We have approximately 1,500 units across North America.

00:03:25.920 There's other producers.

00:03:27.160 There's some homegrown solutions, people that do this as well.

00:03:29.760 So there's pretty wide adoption of this in Alberta.

00:03:32.260 So is this in partnership with the energy producers or is it just kind of a matter of

00:03:36.280 leasing space or power or that sort of thing?

00:03:39.600 How integrated are you with the welling?

00:03:41.780 It's a combination.

00:03:44.140 Most of our clients actually just buy the equipment from us and then we'll go and operate.

00:03:48.120 Some of them will be a broker.

00:03:49.320 They might go partner with a midstream or they're going to go and partner with somebody that's

00:03:53.600 actually just the owner at the wellhead and do it there.

00:03:55.780 So it's a variety of different relationships depending on what the business plan was for

00:03:59.960 that operator.

00:04:00.780 Yeah.

00:04:00.980 And I mean, I just remember as a young guy in the oil field, there was nothing more wasteful

00:04:04.040 to see than go out in the night back then when flaring was so common.

00:04:06.600 You're just taking gas and burning it off.

00:04:08.500 I mean, to capture that and make use of it with something like that.

00:04:12.800 And does this apply to a number of different digital currencies or is it just one?

00:04:16.680 You can mine any digital currency you want that is mineable.

00:04:19.400 However, most people just want to stick with Bitcoin.

00:04:22.500 I mean, you can't mine Ethereum anymore.

00:04:25.220 There are a variety of altcoins.

00:04:27.200 But then, I mean, you're already speculative being a little bit in oil and gas.

00:04:30.720 You don't need to add that extra level of speculation.

00:04:33.480 Bitcoin mining, it's not stable, but it's dramatically more stable than the altcoins or the other

00:04:39.360 cryptocurrencies that are on the market.

00:04:41.100 So what kind of response have you found now?

00:04:42.940 You know, it's been a day and a half at the show talking with some of the producers and

00:04:45.940 other local operators.

00:04:47.740 They're embracing this further?

00:04:49.880 Yeah.

00:04:50.240 The response has been solid.

00:04:52.080 There's been a lot of education around it because there's a lot of people, A, that don't

00:04:55.520 understand the simplicity of Bitcoin mining.

00:04:57.580 They think it's this overly complicated thing when the reality is you plug the servers in,

00:05:01.500 you enter a couple configuration details, and they just run.

00:05:03.780 They do their thing.

00:05:05.340 And then there's some people that are trying to understand what the use case was of the equipment

00:05:09.200 and then others that have looked at our solution that, frankly, have tried to do it themselves

00:05:13.340 and have realized it's pretty complicated to build a modular data center that you can just

00:05:17.140 drop in the field and go and really took a liking to the offering that we have.

00:05:21.560 Great.

00:05:22.280 Well, that kind of is it in a nutshell.

00:05:24.280 Where can people find more information about this if they're looking to get involved?

00:05:27.280 Like, is this scalable for a smaller operation or is it typically larger groups?

00:05:31.640 Yeah, that's one of the big benefits of our solution.

00:05:33.880 We go down as small as 100 kilowatts, which is a relatively small wellhead, and you can

00:05:38.080 run the unit at half capacity.

00:05:40.780 And then we can go all the way up to, you know, we've built 100 megawatt sites, which

00:05:44.140 are, and they scale in modular blocks, which is nice in the sense that, you know, the wellheads

00:05:50.680 aren't always going to produce the same amount of gas.

00:05:52.340 So you might go and put one megawatt worth of units there, but in six, nine months, it's

00:05:56.940 producing different.

00:05:57.660 Well, you can take a module off and go put that in another site.

00:06:00.120 You don't have to take that entire unit.

00:06:01.440 But all of our stuff's at digitalshovel.com, and pretty much any social media is digital

00:06:06.340 underscore shovel.

00:06:07.640 Excellent.

00:06:08.040 Well, I appreciate you explaining that to us.

00:06:09.640 I just love hearing some of the newer, innovative things that are coming out at these shows, too.

00:06:13.000 It's not the old days.

00:06:13.760 They're just talking about pump jacks and derricks.

00:06:15.480 There's much more to it.

00:06:17.000 Well, margins are that much more thin.

00:06:19.460 You've got to look for every possible way to capitalize on a market, and especially in

00:06:23.620 something as competitive as it is right now.

00:06:25.380 Oh, without doubt.

00:06:26.120 Well, thank you very much again for coming to talk to us, and I hope the rest of the show goes

00:06:29.140 well for you.

00:06:29.660 Awesome.

00:06:30.000 Thanks for having us.

00:06:30.500 Great.

00:06:30.680 Thank you.

00:06:32.000 All right.

00:06:32.860 Hey, such a bit.

00:06:33.440 It really does sound cool.

Western Standard - June 14, 2025

Digital pipelines

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