The race for cryptocurrency is on, as miners the world over are looking to strike it rich. But it’s not simply individuals with homemade mining rigs searching online for Bitcoin — large cryptomining enterprises are taking root in countries throughout the world.
As explained in part one of our Bitcoin series, China’s role as world leader in cryptocurrency mining could soon be ending due to government and economic factors. Part two of our series showed how Canada could be an ideal choice for cryptocurrency miners, thanks in part to a surplus of renewable energy resources in a number of provinces, including Manitoba and Quebec.
But if cryptocurrency mining were to actually take hold in Canada, what would that mean for our economy?
Big opportunities for energy
Andrew Kiguel, CEO and Co-Founder of a Toronto-based cryptocurrency mining and blockchain infrastructure company called Hut 8 Mining Corp, would prefer to take advantage of the renewable energy resources close to home.
“There’s a tremendous amount of infrastructure and a lot of gas that’s being stored,” Kiguel explained. “[It’s] left a lot of trapped energy.”
With a need for a mass supply of less expensive energy, Hut 8 had its energy eye set on Quebec. However, the Hydro Quebec energy surplus was not yet available to cryptocurrency mining ventures, and the burgeoning crypto company explored other Canadian options. Ultimately, Hut 8 settled a majority of its operation in Medicine Hat, Alberta.
“We’re tapping into what is essentially trapped energy, and the producers there are very keen to work with people like us because otherwise, they need to shut down production and lay people off,” he added.
A hub for high tech innovators
Cryptocurrency mining may be good news for Alberta’s natural gas producers in the short term, but Kiguel says there’s long-term value in being recognized as a haven for high tech of any kind.
“There are a lot of places where you can get cheaper electricity than Canada — you could go to Venezuela and get super cheap electricity. You could go to Siberia and get super cheap electricity,” he said. “But for a country with limited political risk, an educated workforce and entrepreneurial spirit, Canada is an ideal location.”
Kiguel adds that Canada has attractive financing incentives for startups that move their operations to the country. “In Canada, there’s a mechanism for a lot of these companies to get financed. That, combined with the geopolitical stability, makes it an ideal area,” he said.
Attracting industry leaders
While a spike in cryptocurrency mining won’t have a major, direct economic impact to the country, Kiguel says that commitment to attracting the world’s best and brightest is likely to result in indirect economic growth.
“There won’t be a plethora of jobs created everywhere there’s a mine,” he said. “We find it’s about one person per megawatt, so in a place like Medicine Hat we’ll hire about 42 people for our 42-megawatt facility on a full-time basis.”
Kiguel says that another 100 or so people would be temporarily employed during the construction process, but the industry overall isn’t claiming to be a major job creator. Instead, he believes the real opportunity comes from attracting tech industry leaders to the country, citing a similar case south of the border.
“When the chip design was all being done in Silicon Valley, you saw the peripheral things that come out of that — companies like Apple,” he said. “As people become interested in this, you can have people [in Canada] who are immersed in blockchain. Schools can start educating people in those areas, and Canada can become a technological leader in this space.”
Could the blockchain transform Canadian society?
Kiguel and others ultimately believe that blockchain — the underlying technology that powers cryptocurrencies — will be as consequential as other emerging technologies like artificial intelligence. As an enabler of decentralized and tamper-proof record keeping, blockchain is poised to have significant impacts on industries ranging from healthcare to contract law.
“This is very similar to the Internet 20 years ago,” explained Kiguel. “You didn’t know you’d be using it to get a stranger to pick you up in their car. You didn’t think you’d be using it to order food. You didn’t think you’d be using it to book your flights or do video conference calls.”
While becoming a global hub for cryptocurrency mining won’t have direct economic impacts for many Canadians in the short term, becoming the global hub for blockchain expertise could position the country to lead in an emerging and high potential corner of the technology industry.
“The possibilities here are enormous,” said Kiguel. “We don’t quite know exactly what they are, but it’s evolving quickly.”
China dominates, but will the Great White North take over as leader of crypto mining? Learn about the shifting landscape of cryptocurrency.
Does Canada have an opportunity to become a world leader in the race for crypto dominance? Why Canada is poised to become a world leader in cryptomining.