Local stakeholders believe that a moratorium on crypto mining could actually mean the beginning of a new dialogue between government and industry.
Canada remains an unusual regulatory alternative to neighboring United States when it comes to cryptocurrencies. While its licensing process is more stringent than some countries, Canada was the first to authorize direct crypto exchange-traded funds. State pension funds have invested in digital assets, and crypto mining firms have moved into the country to take advantage of cooler temperatures and lower energy prices.
But the gold rush for Canada’s miners may be slowing. In early December, the hydropower-rich province of Manitoba imposed an 18-month moratorium on new mining projects.
The move echoes a recent initiative by the US state of New York, which suspended license renewals for existing mining operations and required all new proof-of-work miners to use 100% renewable energy.
These developments should not be considered isolated cases. Both occurred in relatively cold regions with relatively low hydrologic profiles, so the bolt-tightness of Manitoba’s less energy-sustainable regions does not seem optimistic.
Could it change Canada’s status as a miners’ paradise?
Natural predisposition
In October 2021, the price of Bitcoin
BTC
Tickers down
$22,848
Over $60,000. By then, Canada had become the fourth largest BTC mining center in the world, mining 9.55% of the country’s total bitcoin (up from 1.87% a year earlier). The country has effectively filled the void left by China’s crackdown, which nearly wiped out mining operations in the country by 2021 – although the United States has benefited the most from the punishment, moving from sixth to first in terms of Bitcoin hash rate.
Technical expert in Bitcoin mining operation. Source: Paul Chiasson/The Canadian Press
After the fall of China, the Canadian government did not have to make any special efforts to attract the interest of global miners. The country has two obvious advantages to offer everyone: a cool climate and abundant hydropower. A 2021 study by the DEKIS Research Group at the University of Avila ranked Canada 17th in the world in terms of sustainable mining potential, behind the United States (25th), China (40th), Russia (43rd) or Kazakhstan (43rd and 66th).
The high score was made possible by a combination of low electricity prices ($0.113 per kilowatt hour), low average temperatures (-5.35 Celsius) and a high human capital index (0.8).
The mining ban will last for 18 months
Regardless of the country’s appeal to crypto miners, the province of Manitoba, which enjoys Canada’s second-lowest energy prices, imposed an 18-month moratorium on new mining operations in November. The decision was justified on the grounds that the new operations would threaten the local electricity grid. As Manitoba Finance Minister Cameron Friesen told CBC:
“We can’t say, ‘Well, everybody can take what [energy] they need, and we’ll build dams.’
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Friesen revealed that recent requests from 17 potential operators called for 371 megawatts of electricity, more than half of the electricity generated by the Kejask generating station. According to him, the demand from new miners will be more than 4,600 MW. There are currently 37 mining facilities in Manitoba whose operations will not be affected by the ban.
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Another concern is the relative lack of jobs that cryptocurrency miners provide. Friesen said cryptocurrency miners “can use hundreds of megawatts and have fewer workers.”
The new normal?
Aidin Kilich, president and chief operating officer of Canadian crypto mining firm Hive Blockchain, doesn’t see the Manitoba case as an isolated incident. In early November, Hydro-Québec, the utility that manages electricity across the Canadian province of Quebec, asked the government to release the company from its obligation to power crypto miners. However, the situation does not indicate a new normal, Kilic told Cointelegraph.
“These moratoriums are in place to give utilities time to evaluate existing crypto mining operations. Canada’s new normal will include crypto-miners working with utilities to balance or recycle the grid
