Proponents of cryptocurrency mining say the industry’s future is at stake in Canada after several provinces moved to curb new projects earlier this year in response to concerns about their electricity use.
Crypto entrepreneurs — most of them focused on Bitcoin — have been drawn to Canada because of the plentiful supply of clean, low-cost power in provinces like British Columbia and Quebec. Most crypto operations require unrestricted access to cheap energy to power the tiers of high-performance computers required for crypto mining.
“Why Canada? So first we said, ‘What are the key ingredients you need to run this computing service?'” said Dan Roberts, an Australian cryptocurrency entrepreneur whose company Iris Energy operates three facilities in BC
“Cool temperatures – really important. Legal certainty, good regulatory jurisdiction. But most importantly: Renewable energies.”
Roberts said he sees a new wave of economic prosperity from cryptocurrency mining in provinces like BC, which currently have an electricity surplus.
“We can build an entire industry around it. We can go to the regional towns where they were decimated by the end of the pulp and paper mill…rehire local workers, retrain them and bring all those benefits back to the community,” he said.
However, some provinces have hit the brakes on new projects, saying that the mining sites — where computers run through complex equations to verify cryptocurrency transactions on the blockchain ledger (and earn digital assets as rewards) — consume a staggering amount of electrical energy.
BC currently has seven operating mining sites with six more in advanced stages of development. But it has also imposed an 18-month moratorium on connecting new crypto-mining projects to its power grid — and halted 21 other projects that the province says used the same amount of electricity as 570,000 homes.
Manitoba has also suspended new crypto connections, while Hydro-Québec has imposed higher tariffs and caps on electricity use for mining projects. Ontario has proposed excluding crypto miners from an incentive program that could allow them to save money on electricity.
Uncertainty clouds future investments
Right now, Canadian crypto miners represent the fourth highest amount of computing power contributed to the blockchain network, after crypto operations in the United States, China, and Kazakhstan. Moves by some provinces to ration the sector’s access to electricity have some crypto enthusiasts questioning whether Canada will continue to be a major player.
“As a public company, I have shareholders and I have to pause or not make decisions until I know the rules. And once I know the rules, I’ll consider whether to invest in Canada or somewhere more lucrative,” said Sheldon Bennett, CEO of DMG Blockchain Solutions and part of the Canadian Digital Asset Mining Coalition, an advocacy group.
This was announced by BC Energy Minister Josie Osborne The house BC’s decision to impose the moratorium should give the province time to consult with industry to ensure the energy is used wisely.
While BC currently has an energy surplus, Osborne said that may not always be the case.
“We don’t want to endanger this stream. So we need to take this break now and instead use the stream for the best opportunities in the future,” she said, host Catherine Cullen.
Osborne argued that in order to meet its climate and economic goals, BC must consider other areas where its power could be more useful.
“Cryptocurrency definitely doesn’t create as many jobs as other industries,” she said.
It also does nothing to help BC meet its climate goals, she added.
“Cryptocurrency mining does not reduce pollution in other industries,” she said. “We want to use this electricity for our mines and for forest operations, for seaport operations and for hydrogen operations [so] We could use the hydrogen to blend and decarbonize natural gas there. We want to use those electrons to their highest and best use.”
Osborne has signaled that her government is somewhat open to hooking up new crypto operations in the future.
Cryptocurrency was once a trending topic in Canadian politics. It was championed by Pierre Poilievre during his successful run for Conservative leadership (he famously bought a shawarma sandwich with Bitcoin just under a year ago).
Poilievre suggested at the time that since they are not influenced by central banks, cryptocurrencies could allow ordinary Canadians to “step out” of inflation. That was before many cryptocurrencies crashed last year; At the end of 2022, the value of Bitcoin had fallen to around a quarter of the previous year’s value.
But the development of politics on crypto is progressing. The Canadian Securities Administrators (CSA), the umbrella organization representing Canada’s provincial and territorial securities regulators, has been pushing for restrictions on crypto trading while the Bank of Canada is in the midst of a digital asset review.
The move of some cryptocurrencies, such as Ethereum — the second largest cryptocurrency — to what is known as a “Proof of Stake” system has eliminated the need for mining, and with it most of the currency’s energy consumption. That gives hope to some proponents that the energy argument against cryptocurrencies can one day be eliminated.
But Bitcoin remains on a “proof-of-work” model, where mining is key. Bennett said he was surprised at Canada’s willingness to engage with the new sector.
“What does Canada want to do with this industry? Does it want to promote and develop them? Does it value the technology, the jobs and the investments that go into them and want to grow them?” he said.
“Or does it want to sit back and see how other countries handle it?”
