DMG's 85 MW AI data centre skirts BC regs, reshaping cloud infrastructure costs

A regulatory gap in British Columbia's electricity oversight is allowing a cryptocurrency miner turned AI data center operator to rapidly scale its power consumption to levels that could strain the regional grid, all while bypassing new provincial rules designed to limit such growth. DMG Blockchain Solutions, operating on a site south of Christina Lake in the Kootenay region, secured a 2024 contract with FortisBC to expand its facility's power draw from 15 megawatts to as much as 65 megawatts, with its dedicated substation capable of handling up to 85 megawatts—more than 10 percent of the total capacity on the FortisBC grid. Now the company wants to use that power for an AI data center rather than crypto mining, a pivot that has blindsided local officials and exposed a significant loophole: the B.C. government's recent clampdown on power-intensive data centers only applies to BC Hydro, the province's primary utility, and has no jurisdiction over FortisBC's service territory. The Regional District of Kootenay Boundary (RDKB) was not consulted. Grace McGregor, Area C director, learned of the changes through a news release. 'I’m not against data centres,' she said. 'What I am against is that nobody lets you know what’s going on.' Zoning rules across most of the RDKB prohibit data centres, but DMG's site has a bespoke zoning carve-out created years ago for its crypto mining operations—a legacy that may now shelter a much larger and fundamentally different facility without any public approval process. This controversy unfolds against the backdrop of surging AI demand for compute, which has sent technology companies scrambling for power across North America. B.C. Hydro, worried about residential rate impacts and grid reliability, introduced a competitive bidding system for new data center connections. Yet FortisBC, a subsidiary of publicly traded Fortis Inc., operates under separate provincial regulation and service agreements that leave it largely free to negotiate bulk power deals without the same scrutiny. The result is an unplanned regulatory arbitrage: developers can locate in the Southern Interior and secure tens of megawatts without facing the same competitive or environmental review hurdles, potentially turning the Kootenays into a de facto data center haven. For Fortis Inc., the load growth could boost revenue but also invites risk. With a regulated return on equity, large new industrial loads generally benefit shareholders, but public backlash and potential political intervention could force costly remedies or stricter oversight. The stock (FTS) has traded in a narrow range recently, reflecting its steady utility profile, but the emerging controversy could introduce uncertainty. DMG Blockchain Solutions, meanwhile, may see the pivot as a lifeline. Crypto mining economics have been under pressure after the 2024 Bitcoin halving, and AI hosting currently commands premium pricing. Yet the company must now navigate community resistance, possible legal challenges over zoning interpretations, and the broader question of whether FortisBC's grid can truly absorb such a concentrated load without degrading reliability for other customers. Looking forward, the B.C. government could seek to extend its power-connection rules to all utilities, but that would require legislative changes and negotiations with FortisBC, which may argue its existing integrated resource planning already addresses the issue. Alternatively, local governments may step in with their own powers, though the RDKB's current zoning tools appear limited given the site's unique legal status. The case is likely to become a litmus test for how provinces balance the economic allure of AI infrastructure against community and grid stability concerns. If left unchecked, a proliferation of similar projects could lead to supply chain bottlenecks, water conflicts, and higher electricity costs for residents—outcomes that even the most AI-optimistic policymakers want to avoid.