Canada has remained an odd regulatory alternative to the neighboring United States when it comes to cryptocurrency. While its licensing process is becoming more stringent than in some countries, Canada was the first to approve direct cryptocurrency exchange funds. Government pension funds have invested in digital assets, and crypto-mining companies have moved into the country to take advantage of cooler temperatures and cheap energy.
But the gold rush for Canadian miners may be slowing. In early December, the province of Manitoba – rich in hydroelectric resources – imposed an 18-month ban on new mining projects.
The move is similar to a recent initiative in the US state of New York that stopped renewing licenses for existing mining operations and required any new miners to prove work using 100% renewable energy.
These developments should not be dismissed as isolated cases. Both occurred in relatively cold regions with large hydroelectric profiles, so Manitoba’s tightening of the screws does not look optimistic for less sustainable energy regions.
Could this change Canada’s status as a haven for miners?
In October 2021, the price of bitcoin skyrocketed
over the $60,000 mark. By then, Canada had become the fourth largest bitcoin mining destination in the world, with 9.55% of all bitcoins mined in the country (up from 1.87% a year earlier). The nation effectively filled the gap left by the campaign in China, which nearly eliminated mining activity in the country by 2021 — though the United States won the most of the campaign, rising from sixth to number one in terms of bitcoin hash rate.
Bitcoin mining technician. Source: Paul Chiasson / The Canadian Press
The Canadian government did not have to make any special efforts to interest global miners after the fall of China. The country has two distinct advantages to offer to all: its cool climate and abundant hydroelectric power. A 2021 study by DEKIS Research Group at Avila University ranks Canada 17th in the world for sustainable mining potential, higher than the United States (25th), China (40th), Russia (43rd) or Kazakhstan (66th).
This high score was achieved through a combination of lower electricity prices ($0.113 per kWh), lower average temperature (−5.35 °C), and higher human capital index (0.8).
The mining ban lasts for 18 months
Regardless of the country’s appeal to crypto miners, the province of Manitoba, which has the second lowest energy prices in Canada, placed an 18-month suspension on new mining operations in November. The decision was justified on the grounds that the new operations could endanger the local electricity grid. As Manitoba Finance Minister Cameron Friesen told CBC:
“We can’t simply say, ‘Well, anybody can take whatever [energy] they want to take and we’ll simply build the dams. ‘ The last one cost $13 billion if you priced in the [transmission] line.”
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Friesen revealed that recent orders from 17 potential operators will require 371 megawatts of power, which is more than half the power generated by the Keeyask generating plant. According to him, demand from new miners will amount to more than 4,600 megawatts when other, less formal inquiries are included. There are currently 37 mining facilities in Manitoba, and their operations will not be affected by the ban.
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Also of concern is the relative lack of jobs offered by cryptocurrency miners. Cryptocurrency miners “can use hundreds of megawatts and have a handful of workers,” Friesen said.
The new normal?
Aydin Kilic, President and Chief Operating Officer of Canadian miner Hive Blockchain, doesn’t see the Manitoba issue as an isolated event. In early November, Hydro-Québec, which runs electricity across the Canadian province of Quebec, asked the government to release the company from its obligation to supply power to crypto miners. However, the situation does not imply a new normal either, Kilic told Cointelegraph:
“These pauses were put in place to give utilities time to evaluate existing crypto mining operations. The new normal in Canada will have crypto miners working with utilities to balance the grid or recycle energy in thoughtful ways, with an emphasis on sustainability.”
Given that Hive Blockchain uses heat from its 40,000-square-foot facility in Quebec to heat a 200,000-square-foot swimming pool manufacturing plant, Killick sees recent developments as an opportunity for local energy suppliers to figure out their approach to mining. staff.