Moratorium on Cryptomining in Canada
2023.01.14 10:17
Moratorium on Cryptomining in Canada
By Tiffany Smith
Budrigannews.com – Regarding cryptocurrency, Canada has remained an unusual regulatory alternative to the neighboring United States. Canada was the first country to approve direct crypto exchange-traded funds, even though its licensing process has become more stringent than in other nations. Digital assets have been invested in by state pension funds, and crypto mining companies have relocated to the country to take advantage of the low energy costs and cool temperatures.
However, the Canadian gold rush for miners may be slowing down. The province of Manitoba, which is rich in hydroelectric resources, imposed an 18-month moratorium on new mining projects at the beginning of December.
This move was similar to one that was recently implemented in the state of New York in the United States. That initiative mandated that any new proof-of-work miners use only renewable energy and stopped the renewal of licenses for existing mining operations.
It is not appropriate to dismiss these developments as isolated instances. Both took place in relatively cool regions with significant hydroelectric energy profiles; consequently, tightening the screws in Manitoba does not appear to bode well for regions that are less energy-sustainable.
Could this affect Canada’s status as a mining haven?
The price of Bitcoin (BTC) soared above $60,000 in October 2021. By that point, 9.55 percent of all Bitcoin was being mined in Canada, up from 1.87 percent a year earlier, making it the fourth-largest destination for BTC mining worldwide. Although the United States won the most from the crackdown, moving from sixth place to first place in terms of Bitcoin hash rate, the nation effectively filled a gap left by China’s crackdown, which almost stopped mining in the country by 2021.
After China’s fall, the Canadian government didn’t have to do much to pique the interest of international miners. The nation has two obvious benefits for everyone: it has a pleasant climate and a lot of hydropower. Canada outranks the United States (25th), China (40th), Russia (43rd), and Kazakhstan (66th) in terms of its sustainable mining potential, according to a 2021 study by the DEKIS Research Group at the University of Avila.
Despite the country’s attractiveness to crypto miners, the province of Manitoba, which has the second-lowest energy prices in Canada, imposed an 18-month moratorium on new mining operations in November. The low electricity prices ($0.113 per kilowatt hour) and the low average temperature (5.35 Celsius) contributed to the high score. The new operations could compromise the local electricity grid, so the decision was justified. Cameron Friesen, Minister of Finance for Manitoba, stated to the CBC:
We can’t just say, “Well, anyone can take whatever [energy] they want to take and we’ll just build dams,” because that’s not going to work. If you take into account the [transmission] line, the most recent one cost $13 billion.
Friesen revealed that 17 potential operators’ recent requests would require 371 megawatts of power, or more than half the Keeyask generating station’s output. Including other, less formal inquiries, he claims that the demand from new miners would exceed 4,600 megawatts. Prohibition will not affect the operations of the 37 existing mining facilities in Manitoba.
The relatively low number of jobs that cryptocurrency miners provide was another cause for concern. According to Friesen, cryptocurrency miners “can be utilizing hundreds of megawatts and have a few workers.”
The case in Manitoba is not an isolated one, according to Aydin Kilic, president and chief operating officer of the Canadian crypto mining company Hive Blockchain. Hydro-Québec, the company in charge of distributing electricity throughout the Canadian province of Quebec, made a request to the government at the beginning of November to free the company from its obligation to power crypto miners. However, Kilic stated that the situation does not indicate a new normal:
“The utilities have put these moratoriums in place so that they can evaluate the current crypto-mining operations.” In Canada, crypto miners would collaborate with utilities to balance the grid or recycle energy in thoughtful ways with a focus on sustainability as the new normal.
Kilic sees the recent developments as an opportunity for local power suppliers to determine their approach to mining operators because 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.
Offshore companies looking to take advantage of Canada’s mild climate and abundant hydroelectric resources have flooded utility companies in the country. He emphasized that domestic digital asset miners’ focus on long-term partnerships has been overshadowed by this, in turn:
“We hope that the utilities can determine, based on their onboarding process, which clients are well-funded, prepared to be long-term customers, and have a track record of undertaking sustainability initiatives,”
Kilic said it takes a ton of speculation to work out the server farms. In that sense, a sound reviewing process expecting diggers to meet specific capital circumstances would boundlessly diminish the quantity of bonafide applications. In his view, that would focus on framework adjusting and supportability also.
Andrew Webber, organizer and President of crypto-mining-as-a-administration firm Computerized Power Enhancement, let Budrigannews know that the ban in Manitoba wouldn’t influence the engaging quality of Canada as a mining objective because of additional essential factors, for example, law and order and the huge measures of overabundance ability to be consumed by tech-effective excavators:
“Energy organizations utilizing Bitcoin mining as a device to assist with upgrading their age resources will be a development region for mining, so we think increasingly more of this will be finished where you’re really restoring an energy issue.”
According to Webber, Bitcoin miners do not utilize the power that is in high demand as a result of straightforward price factors. By providing a profitable load that can be easily shut down when grid-based energy demand rises, they may even increase the grid’s flexibility and resilience. Kilic backed up this idea by claiming that when the grid is stressed, his business can shut down in a matter of seconds.
Whether or not Manitoba’s legislators and regulators will concur with that reasoning will only become clear over time; However, stakeholders continue to have optimism. According to Kilic, Canada has some of the best geography for digital asset infrastructure worldwide and should not miss out on the opportunity to build that infrastructure. Webber anticipates that there will be more mining in both New York and Manitoba “over a decade.”
