Canada has remained a peculiar regulatory alternative to the neighboring United States in regard to cryptocurrency. While its licensing process has be
Canada has remained a peculiar regulatory alternative to the neighboring United States in regard to cryptocurrency. While its licensing process has become more stringent than in some countries, Canada was the first to approve direct crypto exchange-traded funds. State pension funds have invested in digital assets, and crypto mining firms have moved to the country to take advantage of the cool temperatures and cheap energy prices.
But the gold rush for miners in Canada may be slowing down. In early December, the province of Manitoba — rich in hydroelectric resources — enacted an 18-month moratorium on new mining projects.
This move resembled a recent initiative in the U.S. state of New York that stopped the renewal of licenses for existing mining operations and required any new proof-of-work miners to use 100% renewable energy.
These developments shouldn’t be brushed off as isolated cases. Both took place in relatively cool regions with significant hydroelectric energy profiles, so tightening the screws in Manitoba doesn’t seem optimistic for less-energy-sustainable regions.
Could this change Canada’s status as a haven for miners?
The natural predisposition
In October 2021, the price of Bitcoin (BTC) towered above the $60,000 mark. By that time, Canada had become the fourth-largest destination for BTC mining in the world, with 9.55% of all Bitcoin being mined in the country (as opposed to 1.87% a year earlier). The nation effectively filled a gap left by the crackdown in China, which almost nullified the mining activity in the country by 2021 — although the United States won the most from the crackdown, rising from sixth place to first place in terms of Bitcoin hash rate.
The Canadian government didn’t have to make any particular efforts to draw the interest of global miners after the fall of China. The country has two obvious advantages to offer everyone: its cool climate and abundance of hydropower. A 2021 study by DEKIS Research Group at the University of Avila ranked Canada as 17th in the world in terms of its sustainable mining potential, which is higher than the United States (25th), China (40th), Russia (43rd) or Kazakhstan (66th).
The high score was made possible by a combination of low electricity prices ($0.113 per kilowatt hour), low average temperature (−5.35 Celsius) and a high Human Capital Index (0.8)
Mining ban to last for 18 months
Regardless of the country’s attractiveness to crypto miners, the province of Manitoba, which enjoys the second-lowest energy prices in Canada, set an 18-month moratorium on new mining operations in November. The decision was justified on the grounds that new operations might compromise the local electricity grid. As Manitoba Finance Minister Cameron Friesen told the CBC:
“We can’t simply say, ‘Well, anyone can take whatever [energy] they want to take and we’ll simply build dams’. The last one cost $13 billion if you priced in the [transmission] line.”
Friesen revealed that recent requests from 17 potential operators would require 371 megawatts of power, which is over half the power generated by the Keeyask generating station. According to him, the demand from new miners would total more than 4,600 megawatts when including other, less formal, inquiries. There are currently 37 mining facilities in Manitoba, and their operations won’t be affected by prohibition.
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Of further concern was the relative lack of jobs that cryptocurrency miners provide. Friesen said that cryptocurrency miners “can be utilizing hundreds of megawatts and have a handful of workers.”
The new normal?
Aydin Kilic, president and chief operating officer of Canadian crypto mining firm Hive Blockchain, doesn’t see the Manitoba case as an isolated event. In early November, the firm managing electricity across the Canadian province of Quebec, Hydro-Québec, requested the government release the company from its obligation to power crypto miners. However, the situation does not imply a new normal either, Kilic told Cointelegraph:
“These moratoriums are in place to give the utilities time to evaluate the existing crypto-mining operations. The new normal in Canada would involve crypto miners working with utilities to balance the grid or recycle energy in thoughtful ways, with a focus on sustainability.”
Given that Hive Blockchain is using the heat from its 40,000-square-foot facility in Quebec to heat a 200,000-square-foot swimming pool manufacturing plant, Kilic sees the recent developments as an opportunity for local power suppliers to figure out their approach to mining operators.
Canadian utility companies have been bombarded with inquiries from offshore entities looking to take advantage of Canada’s…
cointelegraph.com