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Canada continues to be a unique regulatory alternative to its neighbour, the United States, when it comes to cryptocurrencies. Although its licensing process is stricter than some countries, Canada was the first to approve a fund traded directly on a cryptocurrency exchange. The country’s pension funds are investing in digital assets, and cryptocurrency mining companies are moving to the country to take advantage of cooler temperatures and lower energy prices.
But the Canadian miners’ gold rush may be slowing. In early December, the state of Manitoba, rich in hydroelectric resources, enacted an 18-month moratorium on new mining projects.
The move is similar to a recent initiative in the US state of New York that stopped license renewals for existing mining operations and required new proof-of-work miners to use 100% renewable energy.
These developments should not be dismissed as isolated cases. Both took place in relatively cool regions with a large hydropower energy profile, so tightening the screws in Manitoba does not seem optimistic for an energy less sustainable region.
Could this change Canada’s status as a miner’s haven?
natural predisposition
In October 2021, the price of Bitcoin (BTC) surpassed $60,000. By that time, Canada had become her 4th largest BTC mining destination in the world, with 9.55% of his total Bitcoin mined domestically (compared to his 1.87% a year earlier). target). The country has effectively closed the gap left by the crackdown in China, nearly eliminating domestic mining activity by 2021, but the biggest crackdown win has been in the United States, where Bitcoin hashrate rose from his 6th place to his 1st place.
After the collapse of China, the Canadian government didn’t have to do much to attract the attention of the world’s miners. The country has two distinct advantages for her: a cool climate and abundant hydroelectric power. In her 2021 study by his DEKIS Research Group at the University of Avila, Canada ranked her 17th in the world in terms of sustainable mining potential. This is the United States (25th), China (40th), Russia (43rd), or Kazakhstan (66th).
This high score is made possible by a combination of low electricity prices ($0.113 per kWh), low average temperatures (-5.35 degrees Celsius), and a high human capital index (0.8).
Mining ban lasts 18 months
Despite the country’s appeal to cryptocurrency miners, Manitoba, which has Canada’s second-lowest energy prices, decided in November to halt new mining operations for 18 months. The decision was justified on the grounds that the new operation could endanger the local power grid.As Manitoba’s Finance Minister Cameron Friesen told the CBC:
“We can’t simply say, ‘Well, anyone can take anything. [energy] They want to take and we just build the dam. The last one cost $13 billion if you bid [transmission] line. “
Friesen revealed that recent requests from 17 potential operators required 371 megawatts of power. This is more than half of the electricity produced by the Keeyask power station. Demand from new miners, including other less formal inquiries, totals him more than 4,600 megawatts, he said. Manitoba currently has 37 mining facilities whose operations are unaffected by the ban.
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Even more concerning is the relative scarcity of jobs offered by cryptocurrency miners. Friesen said cryptocurrency miners “may use hundreds of megawatts and have a handful of workers.”
New normal?
Aydin Killik, president and chief operating officer of Canadian crypto mining firm Hive Blockchain, does not consider the Manitoba case to be an isolated incident. In early November, Hydro He Quebec, the company that manages electricity in the Canadian province of Quebec, demanded that the government relieve the company of its obligation to provide electricity to cryptocurrency miners. But this situation does not mean the new normal either.
“These moratoriums are in place to give utilities time to evaluate their existing crypto mining operations. cryptocurrency miners need to cooperate with power companies to recycle
Given that Hive Blockchain is using heat from a 40,000-square-foot facility in Quebec to heat a 200,000-square-foot swimming pool manufacturing plant, Kilic wants the recent development to be mined by a local power supplier. view it as an opportunity to understand the approach of operator.
Canadian utility companies are inundated with inquiries from offshore entities looking to take advantage of Canada’s cool climate and abundant hydro energy resources. This has overshadowed demand from domestic digital asset miners who are focused on long-term partnerships, he stressed:
“We hope utilities can determine from the onboarding process which clients are well-funded and set to be long-term clients with a track record of sustainability initiatives.”
Kilic says building a data center requires a large investment. In that sense, a sound vetting process that requires miners to meet certain capital requirements would greatly reduce the number of bona fide applications. In his view, it will also commit to grid balance and sustainability.
Andrew Webber, founder and CEO of crypto mining-as-a-service company Digital Power Optimization, told Cointelegraph that the moratorium on Manitoba will not affect Canada’s attractiveness as a mining destination. said it would. Legislation and the huge amount of excess power consumed by tech-efficient miners:
“Energy companies that use bitcoin mining as a tool to optimize their power generation assets believe that mining will increasingly occur where they are actually solving energy problems, as it will become a growing area of mining. increase.”
Weber said bitcoin miners don’t use high-demand electricity because of a simple price factor: providing a profitable load that can be easily shut down when grid-based energy demand increases. This can even make the grid more flexible and resilient. Kilic confirms this idea, claiming that his company can shut down in seconds when the grid is under load.
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Only time will tell if Manitoba legislators and regulators agree on that reason. But stakeholders remain optimistic. Weber expects both Manitoba and New York to see more mining “over the next decade,” but in Killick’s words, Canada has become a global leader in digital asset infrastructure. It has the best geographical location and the opportunity to build its infrastructure should not be missed. .
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