Exaggerated concerns about the environmental impact of Bitcoin mining shouldn’t lead Canada to keep ignoring its economic and innovation benefits.
In July, the Canadian Blockchain Consortium brought a delegation of digital asset miners and policy leaders from Alberta from Texas, a trade mission intended to support cross-border collaboration and business development between our regions. It was an incredible success, with meetings with Alberta Premier Danielle Smith and other political leaders, our mining community, and the energy sector.
After the trade mission, I was left with a sense of optimism that we have a significant opportunity for economic growth and business development by supporting our mining industry. There are large, multi-billion-dollar companies who are actively interested in expanding to Canada, bringing with them jobs, new technologies, and taxable revenue. However, if we’re going to realize these benefits, digital asset mining needs to be a part of a national strategy.
It’s exciting that a recent House of Commons committee report has recommended that Canada develop its own national blockchain strategy – we need a solid plan at a federal level to be able to grow the industry and target important areas where the technology can benefit our industries, government, and innovation. And Bitcoin is undeniably at the center of this industry.
Bitcoin is by far the most adopted and accepted type of digital asset, with a market capitalization of more than US $550 billion and used by at least 100 million people globally. It is the top cryptocurrency for use by traditional financial institutions and corporations, and the only one considered by the US Securities and Exchange Commission to be safe from potential securities regulation.
What makes Bitcoin different? The process by which new coins are created and the network is maintained – Proof-of-Work mining – makes it highly decentralized, meaning that it is almost impossible for the network to be taken control of by bad actors. Mining is the critical support service for maintaining trust in Bitcoin, and its energy consumption is essential for this mechanism to work.
Blockchain technology is a growing IT innovation to allow for more dependable, verifiable, and transparent information to be shared across the world.
I’ve long been an advocate for this technology and was honoured to receive the ‘Supporter of the Year’ award from the Canadian Blockchain Consortium.
Just like traditional finance uses computing energy and must support large energy-intensive infrastructure like office buildings, the economy of Bitcoin needs energy to operate. No other industry receives as much criticism for its energy consumption, and this negative sentiment has caused Canada to be skeptical about encouraging mining data center development.
Currently, several provinces have a moratorium on new mining data centers, including BC, which issued an 18-month pause on new requests in December of 2022, with Manitoba doing the same. Dozens of municipalities in Quebec and the province’s energy regulator have also launched temporary bans.
Grid stability and environmental impact are the two concerns most often used by these provinces to justify the moratoriums. For the first issue, Bitcoin is a highly flexible power source that unlike most other industries, can simply pause operations to help grid operators manage power demand surges, like they do in Texas during storms and heatwaves. Secondly, there is a lot of evidence to suggest that mining is becoming a far more sustainable and will continue to find efficiencies and use less energy.
As a source of revenue for renewables projects like wind and solar that can be used for project financing, Bitcoin is supporting more investment in green energy. A good example is the Tesla and Blockstream collaboration in Texas, where miners are taking a development role in renewables projects and sharing the energy with industry. Bitcoin is already far more green than industries like gold mining and is continually becoming more efficient, utilizing a greater percentage of hydro, solar and wind power than most other sectors.
This progress hasn’t dampened fear mongering about its energy use, but regardless of critics, Bitcoin is here to stay. Canada should be paying attention to the moves in US that indicate that huge Bitcoin ETFs – including one led by the world’s largest asset manager, BlackRock – will be approved by the SEC, leading to an unprecedented shift of institutional capital into the market. If Bitcoin is accepted and mainstream, then it follows that the technology that powers it has to be as well.
Additionally, if Canada wants to enhance its AI innovation and growth, building more data center capacity is critical. We’re just at the beginnings of commercially useful AI, and training programs like Chat GPT3 has vast power requirements – the equivalent of a small city’s daily power for a single model. This doesn’t include the actual use of generative AI, and predictions are that it will need a major increase in data centers. Already, miners are collocating with AI to provide flexible power and fund new data center development.
By bringing economic activity to rural and remote communities, digital asset miners are able to provide a source of much needed tax revenue to the local governments where they operate.
In Texas, mining data centers have catalyzed the development of renewable energy, caused small, post-industrial towns to be rejuvenated with large investments and quality jobs, and supported the development of companies that provide services to the industry, like digital exchanges, computer engineering, and financial services. We urgently need more well-paid jobs and digital innovation, and mining is a great facilitator of both.
Canada shouldn’t continue to look at digital asset mining through the lens of exaggerated fears about Proof-of-Work’s environmental impact. This is an essential service that is an equally valid use of energy as high performance computing and AI and is continually becoming more sustainable. Bitcoin is a big part of the world’s financial future – and the infrastructure that keeps it safe and trusted needs to be in Canada’s blockchain strategy.