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North America has become a major center of Bitcoin mining activity after China's sudden ban in May 2021. While the U.S. grabs most of the headlines and a fair share of investor attention, Canada has also cemented its position as a global mining leader. From industrial mining farms to off-grid guerrilla mining operations, Canada is home to miners of all kinds. But in the final months of 2022, several provinces targeted bitcoin miners and suspended any new grid connections while an "environmental assessment" was launched. Local changes in the regulatory stance towards miners are described below.
Canadian Mining Regulations
In late 2022, Hydro-Québec announced that the province would stop selling cheap electricity to cryptocurrency miners, according to the report’s author, The Wall Street Journal. The proposal calls on Canada’s energy regulator to suspend allocating the 270 megawatts requested by cryptocurrency miners. Bitcoin miners in Quebec have recognized that local regulations place too many limits on simple growth, but this new proposal could make mining more difficult in the province.
After Thanksgiving, Manitoba announced its plan to stop any new grid connections for cryptocurrency mining operations. According to the province’s finance minister, the moratorium will last for 18 months from November 2022 to allow for a review of externalities in the mining industry’s energy demand.
The 37 mining facilities currently operating in Manitoba will not be affected for the time being. But requests for new connections from 17 different operators have been put on hold, according to CBC News.
Just before Christmas, British Columbia made headlines for assessing the environmental impact of cryptocurrency mining operations. Bitcoin mining companies will be suspended for 18 months from accepting any new grid connection requests. The province said at the time that 21 pending applications had been suspended. An assessment of how bitcoin mining could affect the province's "environmental goals" is the reason for the 18-month moratorium in British Columbia.
Before these grid connection restrictions, Canada had long been a global center for the growth of cryptocurrencies, particularly bitcoin mining operations with an estimated 7% global hashrate operating within its borders. But there are a few places where miners are starting to feel less welcome. The second is a coincidence, the third is a trend, as the saying goes.
At the highest levels of the Canadian government, current Prime Minister Justin Trudeau has publicly expressed his displeasure with the cryptocurrency industry as a whole. After his conservative opponent, Pierre Poilievre, expressed strong support for Bitcoin, Trudeau immediately fired back saying "a sense of mission; a sense of responsibility." unstable". However, judging by his personal tweets, Trudeau has never tweeted about crypto, bitcoin or mining.
Canadian Mining Landscape
Mining discourse often refers to "North America" collectively as "North America", or "United States" alone as "United States". But Canada has played a major role in increasing the online hash rate across North America. And, for the most part, Canadian miners endured a harsher climate than their southern counterparts. For example, Upstream Data CEO Steve Barber shared images of the underappreciated and damaging impact of severe Canadian weather on Bitcoin mining operations. Frozen cables, frozen hardware, and snowdrifts are not ideal conditions for mining.
But some of the most prominent public and private mining companies operate or are headquartered in Canada. For public companies, the list includes Bit Farm, SATO Technology, Hut 8, and more. Private companies headquartered or operating in Canada include Compass Mining, Bitfury, Upstream Data, and others. Almost all of these brands are near household names in the Bitcoin economy and often play a key role in promoting and educating Bitcoin. Canada has no small footprint in the Bitcoin market.
Responding to regulatory changes
In Canada, local hostility to bitcoin mining expansion may be recent news, but the broader industry is no stranger to the sentiment. The industry is united in clamoring against a proposed two-year moratorium on fossil fuel-powered mining expansion projects in New York. In late November 2022, the bill will pass. The move was encouraged by other left-leaning politicians. Canada seems to be copying their playbook.
Canada's new stance on mining is also modeled on another international mining hotspot: Kazakhstan. Kazakhstan has started proposing electricity consumption limits for new mining operations in October 2021 after absorbing a significant amount of mining activity leaving China.
So, how have Canadian miners reacted?
News of Quebec’s proposal to suspend any new grid connections was widely shared among the Bitcoin community on Twitter. Unsurprisingly, the discussions were negative and critical.
Upstream Data's Barbour isn't entirely shocked, though. Ho tweeted that the famous Quebec is censoring Bitcoin miners "again". Why is the proposed grid connection limit not surprising? Because miners "compete with utilities," according to Barbour.
"Expect increased discrimination," he tweeted.
Despite changing regulatory sentiment, some of Canada's largest miners still plan to expand. Bitfarms said it “continues to seek to expand its presence in Quebec and add more jobs in the region.” The press release comes shortly after news of Hydro-Québec’s proposal broke. The press release quantifies Bit Farm's impact on the local economy, adding: "Bit Farm has invested more than $350 million in Quebec since its inception and currently employs more than 100 people."
Canada's choice
Political support or hostility towards Bitcoin ultimately means little to the long-term success of the network. In the short term, however, 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 sweeping ban from 2021. But the moratorium on all new grid connection requests in multiple regions remains extremely disruptive. Canadian provinces now face a choice: risk losing hashrate to other jurisdictions or embrace mining and the heavily documented socio-economic benefits it offers.
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