Crypto at a crossroads: Some provinces are wary of the technology’s vast appetite for electricity | CBC News

Cryptocurrency mining advocates say the future of the industry in Canada is at stake after several provinces moved to restrict new projects earlier this year in response to concerns about their electricity use.

Crypto entrepreneurs, most of them focused on Bitcoin, have been drawn to Canada because of the abundant supply of clean, cheap electricity in provinces like British Columbia and Quebec. Most crypto operations need unrestricted access to cheap power to run the rows of high-powered computers required for crypto mining.

"Why Canada? So, first of all, we said, 'What are the key ingredients you need to run this computing service?'" said Dan Roberts, an Australian cryptocurrency entrepreneur whose company, Iris Energy, operates three facilities. in BC.

"Cool temperatures: really important. Stable law, good regulatory jurisdiction. But most importantly, renewable energy."

Roberts said he sees a new wave of economic prosperity coming from cryptocurrency mining in provinces like BC, which currently enjoys a surplus of electricity.

"We can build a whole industry around this. We can go to those regional towns where they've been decimated by the end of the pulp and paper mill...rehire the local workers, retrain them and give back all these benefits. to the community," he said.

But some provinces have slammed on new projects, saying that mining sites, where computers crunch complex equations to verify cryptocurrency transactions on the blockchain ledger (earning digital assets as rewards), consume a staggering amount. of electric power.

BC currently has seven mining sites in operation, with six more in advanced stages of development. But it also imposed an 18-month moratorium on connecting any new crypto mining projects to its power grid, halting another 21 projects that the province says. would have used the same amount of energy as 570,000 homes.

Manitoba also has new crypto connections paused, while Hydro-Québec has set higher rates and a cap on electricity usage for mining projects. ontario has proposed excluding crypto miners from an incentive program that could save them money on electricity.

Uncertainty clouds future investments

Right now, Canadian crypto miners account for the fourth highest amount of computing power being contributed to the blockchain network, after crypto operations in the United States, China and Kazakhstan. Moves by some provinces to ration the sector's access to electricity have some cryptocurrency enthusiasts questioning whether Canada will continue to be a major player.

"As a public company, I have shareholders and I need to pause or not make decisions until I know what the rules are. And once I know what the rules are, I look at whether to invest in Canada or somewhere more lucrative," he said. Sheldon Bennett, CEO of DMG Blockchain Solutions and part of the Canadian Digital Asset Mining Coalition, an advocacy organization.

BC Energy Minister Josie Osborne said Home BC's decision to impose the moratorium was intended to give the province time to consult with the industry and ensure that power is being used well.

While BC is in surplus power right now, Osborne said that might not always be the case.

"We don't want to put that electricity at risk. That's why we have to take this pause right now and instead use electricity for the best opportunities in the future," he told host Catherine Cullen.

Osborne argued that for BC to meet its climate and economic goals, it must look to other areas where its electricity could be more useful.

“Cryptocurrency definitely does not create the number of jobs that another industry does,” he said.

It also does nothing to help BC achieve its climate goals, he added.

“Cryptocurrency mining does not reduce pollution in other industries,” he said. “We want to use that electricity for our mines and for forestry operations, for marine port operations, for hydrogen operations. [so] we could use the hydrogen to blend natural gas and decarbonize it there. We want to put these electrons to their highest and best use."

Osborne noted that his government is somewhat open to plugging in new crypto operations in the future.

Cryptocurrency was once a hot topic in Canadian politics. He was championed by Pierre Poilievre during his successful Conservative leadership run (he famously bought a shawarma sandwich with Bitcoin just under a year ago).

Poilievre suggested at the time that cryptocurrencies could allow ordinary Canadians to “opt out” of inflation because they are not influenced by central banks. That was before many cryptocurrencies crashed last year; Bitcoin's value at the end of 2022 had dropped to about a quarter of what it had been the year before.

But crypto policy development is moving forward. The Canadian Securities Administrators (CSA), the umbrella organization representing Canada's provincial and territorial securities regulators, has pushed for restrictions on cryptocurrency trading, while the Bank of Canada is in the midst of a crisis. digital asset review.

The shift of some cryptocurrencies such as Ethereum, the second largest cryptocurrency, to what is known as a "proof of stake" system has removed the need for mining, and therefore most of the coin's energy consumption. . That has given some advocates hope that the energy vs. cryptocurrency argument may one day be dropped.

But Bitcoin remains in a "proof of work" model, where mining is key. Bennett said he wonders about Canada's willingness to participate in the new sector.

"What does Canada decide it wants to do with this industry? Does it want to foster it and grow it? Does it appreciate the technology, the jobs and the investment that's coming in and want to grow that?" he said.

"Or do you want to sit back and see how other countries handle it?"