North America became the main center of bitcoin mining activity after China’s sudden ban in May 2021. While the United States has grabbed most of the headlines and a significant part of investors’ attention, Canada is also strengthening its role as a global leader in mining. From industrial mining farms to off-grid guerilla mining operations, Canada is home to miners of all stripes.
But in the final months of 2022, some provinces are targeting bitcoin miners and suspending new network connections while “environmental assessments” begin. This article provides an overview of local changes in the regulatory posture towards miners.
Mining Regulations In Canada
By the end of 2022, Hydro-Quebec announced a proposal for the province to stop selling cheap power to cryptocurrency miners, as reported by The Wall Street Journal. The proposal asks Canada’s Energy Regulator to delay the allocation of 270 megawatts requested by cryptocurrency miners. Bitcoin miners in Quebec have acknowledged that local regulations are too restrictive to make it easy to grow, but this new proposal could make mining in the province more difficult.
After Thanksgiving, Manitoba announced plans to stop connecting new electricity grids to cryptocurrency mining operations. The suspension will last for 18 months from November 2022 to allow for a review of the externalities of the mining industry’s energy demand, according to the provincial finance minister. The 37 mining facilities currently operating in Manitoba will not be affected for now. But new requests for new connections from 17 different operators have been suspended, according to the CBC.
Before Christmas, British Columbia made headlines for its efforts to stop mining growth to assess the environmental impact of cryptocurrency mining operations. An 18-month moratorium has been placed on accepting new requests for special electricity grid connections from bitcoin mining companies. The province said 21 applications pending approval have been delayed. Determining how bitcoin mining affects the province’s “environmental goals” is the stated reason for BC’s 18-month suspension.
Before the grid connection restrictions, Canada had long been a global center for cryptocurrency growth in general and bitcoin mining activity in particular, with an estimated 7% of the global hash rate operating within its borders. But some locals are starting to make the miners unhappy. Two is a coincidence, three is a trend, is a saying.
All the way to the top of the Canadian government, the current prime minister, Justin Trudeau, has made no secret that he frowns on the entire cryptocurrency industry. After fellow conservative Pierre Poilievre voiced strong support for Bitcoin, Trudeau wasted no time calling his rival’s views “irresponsible” and the cryptocurrency “volatile.” But from his personal Twitter, Trudeau has never tweeted about crypto, bitcoin or mining.
Canada’s Mining Landscape
Mining discourses generally reference “North America” collectively or “the US” individually. But Canada has played an important role in strengthening the hash rate to stay online in the North American region. And, in general, the Canadian miners endured a harsher climate than those in the south. For example, Hulu Data CEO Steve Barbour share a picture on Twitter from the underappreciated, damaging effects of harsh Canadian weather on bitcoin mining operations. Frozen cables, icy hardware and large snow drifts do not create ideal mining conditions.
But some of the best-known public and private mining companies operate or are headquartered in Canada. For public companies, the list includes Bitfarms, SATO Technologies, Hut 8 and others. A list of private companies based or operating in Canada includes Compass Mining, Bitfury, Data Hulu and others. Nearly all of these brands are household names in the bitcoin economy and often play a key role in advocating and educating about Bitcoin. Canada’s footprint in the bitcoin market is not small.
Responding to Regulatory Changes
Local hostility to the expansion of operational bitcoin mining may be new news in Canada, but the broader industry is no stranger to this sentiment. All industries banded together to vociferously oppose a proposed two-year moratorium in New York for fossil fuel-powered mining expansion projects. In late November 2022, the bill passed. The move cheering by other leftist politicians. And Canada seems to be copying the playbook.
Canada’s new attitude toward miners also mimics another international mining hotspot: Kazakhstan. After absorbing much of the mining activity that left China, Kazakhstan began proposing power consumption limits for new mining activities in October 2021.
So how did Canadian miners react?
News of Quebec’s proposal to delay new network connections has been around together among Bitcoin social circles on Twitter. Unsurprisingly, the conversation was uniformly negative and critical.
Barbour Data Hulu is not very surprising. Take it to Twitter, which noted that Quebec is “once again” censoring bitcoin miners. Why is the proposed grid connection limit no surprise? Because miners are “competing with utilities,” according to Barbour.
“Expect increased discrimination,” he tweeted.
Despite the shift in regulatory sentiment, some of Canada’s largest miners are still planning to expand. Bitfarms said it “continues to look to expand operations in Québec and add more projects across the region” in a press release issued shortly after the news of the Hydro-Quebec proposal broke. Quantifying Bitfarm’s impact on the local economy, the press release added, “Bitfarms has invested more than CAD $350 million in Québec since its inception and currently employs more than 100 employees.”
Canadian Choice
Politics or hostility towards Bitcoin ultimately means very little to the long-term success of the network. However, in the short term, regulatory restrictions could make life very difficult for mining companies trying to process transactions and find new blocks. Any regulatory opposition from Canada is unlikely to match China’s ban starting in 2021. But some localities delaying all new requests for network connections really upsets everyone.
Canadian provinces now face a choice: risk losing hash rates to other jurisdictions or embrace mining and its documented socioeconomic benefits.
This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.