Canada seems to offer many of the advantages for successful bitcoin mining — lots of stranded renewable energy (mostly hydro), a cooler climate (which is easier on equipment) and a lower fiat currency value (more competitive than the U.S. dollar).
But even with China losing more than 20% of its hash rate in recent weeks because of forced regulatory shutdowns, and with the U.S. rate climbing to 17%, the Cambridge Center for Alternative Finance estimates that Canada’s current share of the world’s Bitcoin network is only 3%.
Malaysia, Kazakhstan, Iran and Russia are all mining at a higher hash rate than Canada.
So, what is keeping bitcoin miners out of Canada?
The Cost Of Energy In Canada Is Prohibitive To Bitcoin Miners
Compass Mining, a full-service mining host and equipment provider, recently released an in-depth mining report that included a look at mining in Canada and concluded that energy should be inexpensive there — but that a problem lies with the regulatory environment. In addition, the report noted that the Canadian government is developing a carbon tax that will likely raise the cost of energy.
Demonstrating this problem, Colin Sullivan, CEO of British Columbia-based MintGreen, explained that energy prices in that province are relatively high because local energy provider BC Hydro is a crown corporation and doesn’t have the same commercial pressures as a private provider.
“I wouldn’t describe energy prices as globally competitive,” Sullivan told Bitcoin Magazine. “In my conversations with Chinese miners, they’re looking for energy costs around $50 per megawatt hour.”
For his business in particular, that concern has not been a deal breaker for operating in Canada, though many other bitcoin mining operations would likely not see it this way.
“MintGreen is less interested in power prices because we create heat markets with our miners,” Sullivan added. “Selling heat from our digital boilers allows us to be much more competitive irrespective of energy price. This and green grid power makes British Columbia an excellent fit for us.”
The World Bank publishes an “Ease Of Doing Business” ranking, which includes a measure of the availability of electricity. Its data gives Canada a low score for its availability of power sources, ranking it 124 out of 190 countries for ease of accessing electricity. (The U.S. ranks 64.)
Citadel256, a Canadian startup with founding partners who are Canadian entrepreneurs, is helping miners from China relocate to Texas and the U.S. Midwest, because this lack of energy availability prohibits it from recommending its home country.
“We’d like to recommend Canada, but the problem here is not so much the cost of energy itself but the logistics of accessing energy markets,” Citadel256 cofounder and mining consultant Magdalena Gronowska told Bitcoin Magazine. “Energy is abundant in Canada but it’s not cheap to access. The cost of energy infrastructure — generation, transmission and…