Cryptocurrency supporters in Canada are questioning if the industry has a future in the country after several provinces restricted the sector earlier this year due to its large electricity consumption.
Crypto entrepreneurs, most of whom are involved with Bitcoin, are attracted to Canada’s plentiful supply of renewable and cheap electricity, which is needed to power the computers used in cryptomining. “We said, ‘What do you need to run this computing service?’ Cool temperatures, a good regulatory system, and renewable energy,” said Dan Roberts, co-founder of Iris Energy, which operates three facilities in British Columbia.
“We can go into regional towns that have been damaged by the end of the pulp-and-paper industry, rehire local workers, retrain them, and deliver all these benefits back into the community,” he added.
CBC News: The House20:20The power of cryptocurrency mining and its uncertain future
But some provinces have taken steps to curb new projects, noting the substantial amount of electricity they use. British Columbia, for example, has imposed an 18-month moratorium on connecting new crypto mining projects to its electrical grid, which would have used the same amount of power as 570,000 households. Manitoba and Hydro-Québec have also taken steps to limit crypto operations, while Ontario has proposed excluding miners from an incentive program.
Canadian crypto miners are the fourth largest contributors to the blockchain network, after the U.S., China, and Kazakhstan. This has led some crypto supporters to speculate if Canada will remain a major player in the sector. “As a public company, I have shareholders and I need to pause or not make decisions until I know what the rules are,” said Sheldon Bennett, CEO of DMG Blockchain Solutions.
British Columbia Energy Minister Josie Osborne told The House that her government’s decision to impose the moratorium was meant to give the province a chance to consult with the industry to make sure energy is being put to good use. She also highlighted how other industries, like mining and forestry, need electricity more than crypto mining, which doesn’t help the province reach its climate goals. “We want to use these electrons for their highest and best use,” said Osborne.
The Canadian Securities Administrators (CSA) and the Bank of Canada have both pushed for restrictions on crypto trading and are conducting a digital asset review. The shift of some cryptocurrencies, like Ethereum, to a “proof of stake” system, which eliminates the need for mining, has provided hope that the energy issue can one day be resolved. But Bitcoin remains on a “proof of work” model.
Cryptocurrency had been a popular topic in Canadian politics last year when Pierre Poilievre ran for the Conservative leadership. He suggested that cryptocurrencies could allow Canadians to “opt out” of inflation. However, many currencies crashed in late 2021, with Bitcoin dropping to one-fourth of its value from the previous year.
“What does Canada decide it wants to do with this industry?” asked Bennett. “Does it want to foster it and grow it? Or does it want to sit and see how other countries manage it?”