China has grown into one of the world’s most significant sources of cryptocurrency mining. But, it is cracking down on the sector due to concerns about excessive energy usage. Until recently, China’s bitcoin mining industry flourished, with the country’s cheap labour, inexpensive electricity and chip manufacturing capabilities. But with the latest directive, that the Chinese government will ban ICOs and shutter bitcoin exchanges, mining cooperatives are seeing the benefits of operating elsewhere.
Bitmain, which runs China’s two largest bitcoin-mining collectives, is setting up a regional headquarters in Singapore and has expanded its operations to the U.S. and Canada. Another mining pool, BTC.TOP has also chosen to open a facility in Canada. Their decisions highlight how China’s role as the cryptocurrency leader is diminishing, as its government clamps down on mining operations.
Canada is luring bitcoin mining companies to its shores. They see the potential to reap taxes, boost local economies, and use excess power. Quebec is one of the largest hydroelectric power producers in the world and routinely produces a surplus meaning electricity is cheap. A cold climate also makes computer cooling costs lower, and Canada’s political stability also makes it attractive.
BTC.TOP Founder Jiang Zhuoer said:
We chose Canada because of the relatively cheap cost and the stability of the country and policies.
Bitcoin mining consumes large quantities of energy because it uses computers to solve complex math puzzles to validate transactions in the cryptocurrency, which are written to the blockchain, or digital ledger. The first miner to solve the problem is rewarded in bitcoin, and the transaction is added to the blockchain.
A year ago, 35 cryptocurrency mining organisations were asking Quebec for information regarding connecting to the power grid there. Those companies now account 70 percent of the total wattage capacity in Hydro Quebec’s development pipeline. David Vincent, business development director at electric utility Hydro Quebec, in an interview with CoinDesk, said:
I have so much demand right now there’s no need for marketing. Pretty much every day I have a new one.
We always succeed at staying below inflation. It’s been like that since 1963 and it’s not going to change.
We have the capacity, but we’re not used to having so much big demand like this. It’s a good problem to have.
To show mining operation’s scale, Vincent compared them to Hydro Quebec’s other customers. Its smallest commercial customers, such as the Montreal Canadiens’ hockey arena, require five megawatts of electricity and a typical data centre requires 30 to 60 megawatts. By contrast, “the top-three to top-five miners in the world, most of them are talking to us, and the demand that they have right now is around 200 to 300 megawatts” he said. “It’s huge.”
So, due to cheap & abundant electricity, appropriate climate and political stability, Canada may become the top Bitcoin mining hub. China is descending, and hence, a golden opportunity arises for Canada.