North America became the leading center of bitcoin mining activity after China’s sudden ban in May 2021. While the United States has grabbed most of the headlines and much of the attention of investors, Canada has also solidified its role as a global leader in mining. From industrial mining farms to off-grid guerilla mining operations, Canada is home to miners of all kinds.
But in the final months of 2022, several states targeted bitcoin miners and suspended any new network connections while an “environmental assessment” 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 a proposal to stop selling cheap electricity to cryptocurrency miners to the province, The Wall Street Journal reported. The proposal called for the Canadian Energy Regulator to stop allocating 270 megawatts requested by cryptocurrency miners. Bitcoin miners in Quebec already recognize that local regulations are too restrictive for easy growth, but this new proposal could make mining in the province even more difficult.
Just after Thanksgiving, Manitoba announced plans to suspend any new power grid connections for cryptocurrency mining operations. The suspension will last for 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 currently operating mining facilities in Manitoba will not be affected for now. But according to the CBC, recent requests for new connections from 17 different operators have been suspended.
Just before Christmas, British Columbia made headlines for its efforts to halt mining growth to assess the environmental impacts of cryptocurrency mining operations. An 18-month moratorium was placed on accepting any new requests to connect to the power grids only from bitcoin mining companies. The province said at the time that 21 applications pending approval had been suspended. Assessing how bitcoin production affects the province’s “environmental goals” is the reason for BC’s 18-month suspension.
Prior to these network access restrictions, Canada had long stood as a global hub for cryptocurrency growth and bitcoin mining activity in particular, with 7% of the global hash rate operating within its borders. However, several regions are not so welcoming to miners. As the proverb says, two is a coincidence, three is a trend.
At the head of the Canadian government, the current Prime Minister Justin Trudeau does not hide his frown on the entire cryptocurrency industry. After fellow Conservative Pierre Poilievre expressed his strong support for Bitcoin, Trudeau wasted no time responding, calling his opponent’s views “irresponsible” and the cryptocurrency “volatile.” However, Trudeau has never tweeted about cryptocurrency, bitcoin or mining from his personal Twitter.
Canadian Mining Landscape
Mining talk generally refers to “North America” collectively or to “the United States” individually. But Canada plays an important role in increasing the hash rate of staying online in the North American region. And for the most part, Canadian miners endure harsher climates than their southern counterparts. For example, Steve Barbour, CEO of Upstream Data shared images The understated, devastating effects of severe Canadian weather on bitcoin mining operations on Twitter. Frozen cables, icy equipment and large snow drifts do not make for ideal mining conditions.
But some of the best-known public and private mining companies operate or are headquartered in Canada. For publicly traded firms, the list includes Bitfarms, SATO Technologies, Hut 8 and more. The list of private companies based or operating in Canada includes Compass Mining, Bitfury, Upstream Data and others. Almost all of these brands are quasi-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 to operational bitcoin mining expansion may be breaking news in Canada, but the broader industry is no stranger to the sentiment. The whole industry merged Outspoken opposition to a proposed two-year moratorium on coal-fired mining expansion projects in New York. The draft law was adopted at the end of November 2022. It was a movement applauded by other leftist politicians. And Canada seems to be copying the playbook.
Canada’s new stance on miners also mimics another international mining hotspot: Kazakhstan. After absorbing the abundant mining activity leaving China, Kazakhstan began proposing energy consumption limits for new mining activity in October 2021.
So how are Canadian miners responding?
Quebec’s proposal to freeze any new network connections has been widely reported shared Among Bitcoin social circles on Twitter. Not surprisingly, the conversation was equally negative and critical.
Upstream Data’s Barbour wasn’t entirely shocked, though. He took to Twitter noted Quebec Censors Bitcoin Miners ‘Again’ Why the proposed network connection restrictions are not surprising? Because miners are “competing with utilities,” according to Barbour.
“Expect increased discrimination,” he said.
Despite the changing regulatory mood, some of Canada’s biggest miners are still planning to expand. Bitfarms said in a press release issued shortly after news of Hydro-Quebec’s proposal that it “continues to look to expand its operations in Quebec and add more jobs in the region.” Quantifying Bitfarm’s impact on the local economy, the press release added: “Bitfarms has invested more than C$350 million in Quebec since its inception and currently employs over 100 people.”
Political favor or hostility toward 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 compete with China’s comprehensive ban starting in 2021. But in many places, stopping all new requests for a network connection is extremely disruptive.
Canadian provinces are now faced with a choice: risk losing hash rate to other jurisdictions, or embrace mining and the heavily documented socio-economic benefits it provides.
This is a guest post by Zack Voell. The views expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.