Alberta judge orders oil and gas company to shut down Bitcoin mine

Bitcoin signage. Photographer: Camilo Freedman/Bloomberg (Camilo Freedman/Bloomberg)

A Calgary oil and gas company has been ordered to remove all its equipment from a piece of land it leased in Rocky View County after it was found to be operating an illegal Bitcoin mining operation at the site.

The Alberta Court of King’s Bench said on March 10 that Persist Oil and Gas Inc. breached the terms of its lease with Roy Flowers, a Rocky View County property owner.

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On Nov. 12, 1999, Olympia Energy Inc., the lessee, and Douglas Milton Chapman, the lessor, entered into a 10-year surface land agreement. That deal was continued with Persist as the successor to Olympia and Flowers the successor to Chapman.

The lease included access to a 3.14-acre oil and gas compressor site along with an access road.

The court said the agreement set out that the land would be used for “any and all purposes and uses as may be necessary for the exploration, development and production of oil, gas, related hydrocarbons or substances produced in association therewith.”

The lease also included the right to build any pipelines at the site, along with a sweet natural gas compressor facility for remediation and reclamation.

Flowers was paid $12,150 per year for those rights.

In his reasons, Justice C.A. Rickards said Persist installed two one-megawatt gas generators, computers and other equipment designed for the purpose of mining Bitcoin in April 2021.

Natural gas from its mining operation was used to power the compressor, when gas prices were low enough for it to be more profitable to mine Bitcoin.

The court said Flowers objected to the mining operation on Aug. 30, 2021, but the company did not comply, instead bringing three more one-megawatt generators to expand its operation.

In a response to further demands from Flowers, Persist’s legal counsel responded, saying it “was not required to comply with Flowers’ demands and that Flowers had no say or interest in what uses Persist makes of the natural gas it produces on the leased premises.”

Flowers later approached the Alberta Land and Property Rights Tribunal, who informed him that allegations of Persist’s Bitcoin mining were outside of its jurisdiction, and he was only entitled to the annual sum Persist paid him for the rights.

The original 10-year lease had expired in 2019 and Flowers and Persist had not agreed to terms for a new one.

On Jan. 23, Flowers approached Rocky View County about the matter and was told Persist did not have appropriate approvals for the mining operation.

“The County issued a formal notice to Flowers’ counsel on Feb. 5, 2025, advising that the mining operation was noncompliant with the County’s Land Use Bylaw and that Persist did not possess the required development permit for the mining operation,” the court said.

Flowers sought injunction

Rickards said Flowers was seeking an injunction against Persist based on:

• The lease expired on Nov. 12, 2019, and was never renewed;
• The mining operation was not permitted under the lease;
• Persist lacked approvals for the mining operation;
• Persist was trespassing on the lands; and
• Its mining operation was creating a nuisance.

In his reasons, Rickards said a lease cannot be terminated until a reclamation certificate is issued, even with the expiry of the terms.

He did find, however, that Bitcoin fell outside the wording of lease as a permitted use.

“The Bitcoin mining operation, Persist would conclude, is allowed as it is simply the use of the electricity which is produced from the natural gas which allows for the continued production of natural gas even when prices are low or there are other impediments to its production,” he wrote.

Bitcoin mining not approved by lease

Rickards said Bitcoin mining was not a permissible use under the lease and if it were, there would be no bounds to what the company could use the natural gas to produce electricity for.

“Persist could have brought a cannabis growing operation (assuming that the cannabis growing operation is as legal as the Bitcoin mining operation would be) onto the leased premises and that would be a permissible use as it would involve Persist using its natural gas to produce the electricity to run the cannabis grow operation and make profits therefrom and to continue producing natural gas when natural gas prices were low or there were other impediments to its production,” Rickards wrote.

“I think there would be no question, but that Flowers would have the right to say that the cannabis growing operation could not be brought onto the leased premises without his approval and that in the absence of his approval Persist would be in breach of the lease if it simply brought the cannabis growing operation onto the leased premises.

“Flowers is granted a permanent injunction requiring Persist to immediately cease the mining operation and to remove all trailers, generators and other chattels and fixtures associated with the mining operation from the lands.”

Rickards denied the claims from Flowers that Persist was trespassing on the land and that its mining operation was creating a nuisance.