They’re doing it in British Columbia, Quebec, Manitoba, Alberta and Labrador — bitcoin miners in Canadian provinces are taking advantage of the country’s cool climate and abundant supplies of hydroelectric power.
A number of provincial governments are offering lower rates to attract bitcoin miners and Labrador’s government is considering energy incentives to attract what it says are “outstanding requests for service” from bitcoin and other “data centre” processors, according to a report from the National Post.
The province of Quebec experimented with energy incentives but was so overwhelmed by the demand from bitcoin miners that it withdrew its lower energy prices — but is still experiencing an increased demand for power.
According to recent reports, Chinese bitcoin mining farms are looking outside of China for cheap power and a number of Chinese bitcoin miners have relocated to Quebec, paying standard business hydro electric rates.
Moving from a Resource-Based to Knowledge-Based Economy
Much of the rural and northern areas of Canada have been resource depleted as forestry and fishery companies used up resources that were close enough to markets to be viable and are now looking for new challenges to drive their economies.
Labrador, a remote and scenic eastern province, is too far from major markets to thrive economically once forestry and fisheries were depleted, and the province has lots of hydro power including two huge power-generating hydroelectric dams — Churchill Falls and Muskrat Falls.
Large hydroelectric dams, which may have made sense in a resource-driven economy, are now financial and environmental liabilities and governments are struggling to justify expenses like the mortgage for Labrador’s Muskrat Falls project, which is still under construction.
The Labrador government says paying for Muskrat Falls (which cost $12.7 billion CDN to build) is one of its biggest challenges, with an estimated $726 million CDN required to meet operating costs in its first year, per the Post.
The government’s energy plan commits to keeping rates at 13.5 cents CDN per kilowatt hour, but a miner who wanted to remain anonymous told Bitcoin Magazine that this won’t cut it for smaller startups, as the largest mining operations can buy power at 3 to 4 cents USD.
However, as much as a year ago, the Labrador Public Utilities Board reported a noticeable increase in demand from mining companies.
“Data businesses are expressing an interest and willingness to ‘take what’s available,’ [an anonymous official] said, and are requesting new transmission infrastructure to make more power available to them in Labrador, locating wherever the feed of power is possible,” according to The Telegram. “They just want low power rates.”
Mining is one of Bitcoin’s most critical practices, but also one of its most misunderstood.
Our guide to bitcoin mining covers everything from the basics of where bitcoin come from and why this process is called “mining” to bitcoin mining centralization and energy use. You’ll find detailed information on bitcoin mining hardware, bitcoin mining pools, bitcoin mining profitability, bitcoin mining legality and more.
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Jessie Willms is a planet earth based former government and political researcher and communications officer helping to document the FinTech revolution and its impact on traditional institutions and governments. You can follow Jessie on Twitter at @WILLMS_.