North America became the main hub of bitcoin mining activity after China’s abrupt ban in May 2021. While the United States grabbed most of the news headlines and a significant portion of investor attention, Canada it also consolidated its role as a world leader in mining. Of industrial mining farms for off the grid guerrilla mining operations, Canada is home to miners of all stripes.
But in the final months of 2022, several provinces targeted bitcoin miners, suspending any new connections to the network while “environmental assessments” began. This article provides an overview of localized changes in the regulatory stance towards miners.
Mining Regulations In Canada
In late 2022, Hydro-Quebec announced its proposal for the province to stop selling cheap power to cryptocurrency miners, such as reported by The Wall Street Journal. The proposal required the Canadian Energy Regulator to suspend the allocation of 270 megawatts requested by cryptocurrency miners. Bitcoin miners in Quebec I already recognize that local regulations are too restrictive to facilitate growth, but this new proposal could make mining in the province even more difficult.
Just after Thanksgiving, Manitoba Announced his plans to halt any new connection to the power grid for cryptocurrency mining operations. The suspension will last 18 months from November 2022 to allow for a review of the externalities of the mining industry’s energy demand, according to the province’s finance minister. The 37 mining facilities currently in operation in Manitoba will not be affected for now. But recent requests for new connections from 17 different operators have been suspended, according to CBC.
Just before Christmas, British Columbia hit the headlines for his efforts to halt the growth of mining to assess the environmental impacts of cryptocurrency mining operations. An 18-month moratorium has been put in place to accept any new requests for connections to the power grid exclusively from bitcoin mining companies. The province said at the time that 21 applications pending approval have been put on hold. Assessing how bitcoin mining affects the province’s “environmental goals” is the stated reason for BC’s 18-month suspension.
Prior to these network connection limitations, Canada had long been a global hub for cryptocurrency growth in general and bitcoin mining activity in particular, with a 7% estimate of the global hash rate operating within its borders. But several towns are starting to make miners feel less welcome. Two is chance, three is trend, as the adage goes.
From 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 his conservative counterpart Pierre Poilievre expressed strong support for Bitcoin, Trudeau wasted no time responding vocation His rival’s views are “irresponsible” and the cryptocurrency “volatile.” However, from his personal Twitter, Trudeau has never tweeted about crypto, bitcoin or mining.
The Canadian mining landscape
Mining discourse generally refers to “North America” collectively or “United States” individually. But Canada plays a big role in bolstering the hash rate that stays online across the North American region. And, for the most part, Canadian miners endure much harsher climates than their southern counterparts. For example, Upstream Data CEO Steve Barbour shared images on Twitter about the destructive and underappreciated effects of harsh Canadian weather on bitcoin mining operations. Frozen cables, icy hardware, and large snowdrifts are not ideal conditions for mining.
But some of the best-known public and private mining companies operate or are headquartered in Canada. For publicly traded companies, the list includes Bitfarms, SATO Technologies, Hut 8, and more. The list of private companies headquartered or operating in Canada includes Compass Mining, Bitfury, Upstream Data and others. Almost all of these brands are almost household names in the bitcoin economy and often play a key role in promoting and educating Bitcoin. Canada’s footprint in the bitcoin market is not small.
Reaction to regulatory changes
Local hostility towards operational bitcoin mining expansions may be recent news in Canada, but the industry at large is no stranger to this sentiment. the whole industry United shouting to oppose to a proposed two-year moratorium in New York on fossil fuel-fired mining expansion projects. By the end of November 2022, the bill passed. the movement was animated by other leftist politicians. And Canada seems to be copying his playbook.
Canada’s new stance toward miners also mimics another international mining hotspot: Kazakhstan. After absorbing a large amount of mining activity coming out of China, Kazakhstan began proposing power consumption limitations for new mining activity in October 2021.
So how are Canadian miners reacting?
News of Quebec’s proposal to suspend any new connection to the grid was widely shared among Bitcoin social circles on Twitter. Unsurprisingly, the talk was uniformly negative and critical.
However, Upstream Data’s Barbour was not entirely surprised. On Twitter, he indicated that Quebec is “once again” censoring bitcoin miners. Why aren’t the proposed grid connection limitations surprising? Because miners “compete with utility companies,” according to Barbour.
“Expect increasing discrimination,” he tweeted.
Despite changing regulatory sentiment, some of Canada’s largest miners are still planning to expand. Bitfarms said it “continues to look to expand its operations in Québec and add more jobs throughout the region” in a Press release published shortly after news of the Hydro-Quebec proposal broke. Quantifying Bitfarm’s impact on the local economy, the press release added: “Bitfarms has invested more than C$350 million in Québec since its inception and currently employs more than 100 employees.”
Canada’s choice
Political favor or hostility towards Bitcoin ultimately means very little to the long-term success of the network. However, in the short term, regulatory constraints can make life very difficult for mining companies trying to process transactions and find new blocks. It is highly unlikely that any regulatory opposition from Canada will compete with China’s outright ban from 2021. But, still, the suspension of all new applications for multi-location grid connections is extremely disruptive.
Canadian provinces now face a choice: risk losing hash rate to other jurisdictions or embrace mining and the widely documented socioeconomic benefits it offers.
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.
