Calgary oil and gas company loses appeal over illegal Bitcoin mining site

A pumpjack draws out oil and gas from a well head near Calgary, Alta., Tuesday, May 6, 2025. Canada has the third largest oil reserves in the world and is the world's fourth largest oil producer. THE CANADIAN PRESS/Jeff McIntosh

A Calgary company that used a surface rights lease to run an illegal Bitcoin mining operation has lost its fight in the Alberta Court of Appeal.

Persist Oil and Gas Inc. operated a gas-processing site in Rocky View County and used natural gas flowing through the processing station to power computer equipment stationed there.

On March 10, 2025, Persist was ordered to remove all of its equipment from the land, owned by Roy Flowers.

In an appeal heard on May 12, the company said the judge misinterpreted the surface rights lease, did not properly consider that Bitcoin mining was allowed, misapplied the test for a permanent injunction and failed to consider relevant evidence in the case.

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The Alberta Court of Appeal dismissed Persist’s claims, saying that the chambers judge “was mindful of the appellant’s arguments” and did not err in any interpretation.

“The lease language is certainly broad enough to encompass changes in the industry, such as novel enhanced hydrocarbon recovery techniques or new technology for the separation or compression of gas. But it is limited to purposes necessary for the exploration, development and production of hydrocarbons or substances produced in association therewith,” the appeal court wrote.

“The Bitcoin mining operation is not an industry improvement or a modification to processes or equipment that is necessary for the exploration, development and production of hydrocarbons.”

Persist also argued that the Alberta Utilities Commission (AUC) approval of the lease gave it the right to use generated electricity at the site for heaters, charging laptops and phones and run refrigeration.

“The AUC approval does not authorize the appellant to use the electricity generated on the leased premises for any and all purposes, nor to breach a term of the lease,” the appeal court wrote.

On the matter of the permanent injunction, the appeal court said it was put in place to ensure Persist stuck to the terms of the lease.

“The chambers judge reasonably considered that the appellant might continue the bitcoin mining operation and expand it, as it had done in the past, and that the respondent ran the risk of proceedings by the county.”

The court also found counsel was unable to prove that the Alberta Energy Regulator oversees Bitcoin operations that consume produced gas.

No bounds to operations, judge said

According to court documents, Persist acquired the lease on Flowers’ land in 2018. The lease provided it with road access to a gas compressor site “for the exploration, development and production of hydrocarbons.”

In April 2021, Persist installed two one-megawatt gas generators, computers and other equipment designed for the purpose of mining bitcoin.

This was done when gas prices were low enough for the Bitcoin mining operation to be more profitable.

Flowers, who had been paid $12,150 per year for the lease, objected to the operation, but Persist ignored his complaints and installed more natural gas generators to expand the bitcoin mining operation.

Persist was ordered to stop because Bitcoin mining was not a permissible use under the lease and, if allowed, could open the door to many other things.

“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,” Justice C.A. Rickards wrote.

Persist’s lease expired in 2019 and all attempts to renew it have been unsuccessful; however, Alberta’s Environmental Protection and Enhancement Act prevented the termination of the lease until a reclamation certificate is issued.

The appeal court said no such certificate was issued by the Alberta Energy Regulator, so the lease remains operable.