The threat of a crackdown on the new crypto economy in countries like China is sending miners to Canada, lured by its cold weather, politically stable climate, cheap power and a welcoming ecosystem for blockchain startups.
Some of eager entrants, according to a recent report by Reuters, are forestry companies in Quebec which are currently considering bids by cryptocurrency miners who want to lease excess mill space in the province that offers plentiful, cheap and renewable energy. Electricity prices in Quebec are among the cheapest in North America, whilst the low average temperatures also help reduce cooling costs.
Hydro-Quebec, Canada’s biggest electric utility, revealed earlier that its has gotten plenty of bites from cryptocurrency miners, many of them currently operating in China, and expects to announce final deals in the near future. Hydro-Quebec said its cryptocurrency sales pipeline more than tripled in a month to over 100 projects.
Resolute Forest Products and Fortress Global Enterprises told Reuters they have received interest from operators of cryptocurrency mining operations, both in Canada and overseas.
CEO of British Columbia-based Fortress Global explained that the sales pitch was simple as those miners want “space and cheap power,” adding that U.S. firms are also interested in space at “the company’s Quebec dissolving pulp mill.”
Cryptocurrency mining consumes large quantities of energy with electricity now counts the largest variable cost in the operation that uses computers to solve complex math puzzles in order to validate transactions.
Chinese miners, who are estimated to generate 75% of the machines plumbing the blockchain, dominated the scene thanks to cheap coal-fired power and a system that allowed them to skirt taxes and grid fees. However, the mainlanders lost their edge after the authorities halted trading of digital coins, banned ICOs and shut down mining in recent months.
Some of the most influential companies went for a hunt in new markets, but the choices are narrowing to Canada and a handful of Nordic countries.
Morgan Stanley estimates demand from crypto miners would rise to as much as 140 terawatt-hours of electricity by the end of 2018, nearly 1 per cent of global demand. That’s also more than anticipated power consumption from electric cars in 2025 and easily surpasses the entire electricity demand of a populated country such as Argentina.
Because of that hype, Samsung Electronics, the conglomerate business that accounts for around 20% of South Korea’s entire economy, has recently made a move into the mining hardware industry.
The tech giant has set up its ASIC chip manufacturing unit over the past year and produced an initial batch of mining hardware to supply an unnamed Chinese equipment provider, with plans to expand its venture to other regions like South Korea and Japan.