British Columbia Places Permanent Ban on New Crypto Mining Projects

In an update to a temporary moratorium in place since 2022, and cutting against the global thaw on crypto engagement and policy of the USA to promote more cryptocurrency business, British Columbia has announced a permanent ban on new cryptocurrency mining projects from accessing the provincial electricity grid. This decision is said to arise from concerns over the environmental effects of cryptocurrency mining and its hefty electricity demands, but this is curious given there has been a temporary ban in effect for 3 years already. AI datacenters will see their access to the BC grid limited as well under this new approach.

Reports from the Cambridge Centre for Alternative Finance indicate that cryptocurrency mining consumes a large quantity of electricity in absolute terms. In 2021, Bitcoin mining alone was responsible for about 0.5% of the world's total electricity use. This statistic has been used to asset that Bitcoin is environmentally damaging, but critiques have been made, noting that electricity demand for "stranded assets" using Bitcoin mining can help fund and support new renewable energy projects and reduce emissions from gas flaring as well.

The decision to make permanent the temporary ban on new mining projects aims to proactively diminish the environmental impact of crypto mining and ensure that the province’s energy resources are used efficiently. However, it also provokes questions about the proper allocation of electricity and the future of the cryptocurrency sector in British Columbia, as well as the economic consequences that might emerge from this ban and whether this might continue to push Bitcoin mining from green hydroelectricity to dirtier sources of power.

The Cambridge Centre for Alternative Finance has regularly published statistics on the electricity usage of cryptocurrency mining. Their reports underscore the major energy demands of mining, particularly for Bitcoin, which relies on an energy-intensive proof-of-work mechanism. The Centre has had to update their methodologies and revise downwards past estimates of electricity usage. The range of theoretical lower and upper bounds means these estimates are just that, but they reveal an upward trend.

Since British Columbia first introduced a temporary ban on new crypto mining connections to the grid in 2022, which was extended in 2024 the immediate impact is not likely to be great. Existing mining operations now have certainty that they still cannot obtain new power connections and continue to look elsewhere for new sites and plan knowing there is no possibility of a new connection. There seems little innovation on the horizon which could help mining projects setup their own power sources in BC and while the winter in Canada provides a very useful heat sink for mining projects, helping reduce costs, a frosty regulatory reception is not conducive to greater investment.

With Canada generally maintaining a very conservative and limited enablement of cryptocurrency businesses in the face of rising demand, this move by British Columbia will continue to push more innovation and talent abroad and away from the great white north. By Michael Bacina