Sunday, January 29, 2023

Canada Can’t Keep Up with Cryptocurrency Mining Demands

Canada Can’t Keep Up with Cryptocurrency Mining Demands

Hydro Quebec in Canada is just one of the nation’s several utility companies rethinking its energy strategies after word has gotten out that it won’t be able to supply all the power necessary to satisfy cryptocurrency miners’ demands.

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Mining is Becoming a Bigger Business

Recently, a county in Washington expressed gratitude to Bitcoin for putting its name on the map and bringing cryptocurrency miners to its towns who were attracted by their low electricity prices. But not everyone appears to be breaking out the champagne.

Since early January, Hydro Quebec has been in serious talks with nearly 30 cryptocurrency miners from China, who according to spokesman Marc-Antoine Pouliot, would invest in the company’s transmission network in exchange for the energy needed to mine bitcoin.

The plan would be brought to fruition over the next four years and put Canada at the head of the line of cryptocurrency hotspots, but a leak has sprung from the dam, and energy sources may not be as powerful as originally thought.

Pouliot explains:

“We won’t be able to power all the projects that we’re receiving. This is evolving very rapidly, so we have to be prudent.”

Situation Calls for Second Thoughts

He continued to say that the company is “receiving dozens of demands each day.” Hydro Quebec isn’t necessarily turning down any entrepreneurs just yet, but a surge in demand is prompting executives to “clearly define their strategy” and reexamine how they’re planning to do business.

“This is the tip of the iceberg,” says Laurent Feral-Pierssens, executive director of KPMG Canada. Feral-Pierssens also works with cryptocurrency miners looking to work in the Quebec space. He says that “only a fraction of the initiatives reached out to Hydro Quebec,” but he expects the number to grow exponentially in a short period of time.

Problems from the Get-Go?

To heighten their chances and make things easier in the long run, several entrepreneurs have already begun breaking their projects down into smaller ventures. But some feel Canada’s endeavor to become a center for bitcoin mining is already doomed.

As the prices of cryptocurrencies continue to rise and appreciate, the prices of energy for mining purposes is bound to grow as well. Eventually, one of two things could occur:

  • Mining will become too expensive, and the number of individuals involved will shrink;
  • Energy sources will be stretched too thin and mining efforts will cease as demand levels cannot be satisfied.

Price Volatility is Adding to the Problem

Morgan Stanley analyst Nicholas Ashworth claims that the instability of digital currency prices is going to make mining procedures very unpredictable:

“If cryptocurrencies continue to appreciate, we expect global mining power consumption to increase. There are plenty of uncertainties, which means energy consumption could inflect in either direction. This is clearly not an exact science.”

Does Canada need to plan a bit more before opening its borders to miners? Post your comments below.

Images via Hydro Quebec, Pixabay, EcoWatch

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