Crypto at a crossroads: Some provinces are wary of the technology's vast appetite for electricity

Proponents of cryptocurrency mining say the industry's future in Canada is hanging in the balance after several provinces moved to restrict new projects earlier this year in response to concerns about their electricity usage.

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

"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 B.C.

"Cool temperatures — really important. Stability of law, good regulatory jurisdiction. But most importantly, renewable energy."

Roberts said he sees a new wave of economic prosperity growing out of cryptocurrency mining in provinces like B.C., which currently enjoys an electricity surplus.

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

But some provinces have slammed the brakes on new projects, saying the mining sites — where computers churn through complex equations to verify cryptocurrency transactions on the blockchain ledger (earning digital assets as a reward) — consume a staggering amount of electrical power.

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

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

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 crypto 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," said Sheldon Bennett, CEO of DMG Blockchain Solutions and part of the Canadian Digital Asset Mining Coalition, an advocacy organization.

B.C. Energy Minister Josie Osborne told The House B.C.'s decision to impose the moratorium was meant to give the province time to consult with the industry to make sure energy is being put to good use.

While B.C. has an energy surplus right now, Osborne said that might not always be the case.

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