Newfoundland and Labrador Limits Cryptocurrency Mining Power Use
Newfoundland and Labrador has joined a series of provinces taking action against the rising energy demands of cryptocurrency mining operations. These facilities rely on numerous computers running continuously to generate digital currencies, which consumes vast quantities of electricity. According to an April report from the Cambridge Digital Mining Industry, Bitcoin production alone is estimated to use around 138 terawatt-hours of electricity annually. This figure is nearly equal to the total electricity consumption of Ontario, which was recorded at 139.4 terawatt-hours the previous year, as indicated by the Independent Electricity System Operator, a provincial Crown entity.
Utility Denies Power Request from Blockchain Labrador Corp.
Blockchain Labrador Corp. sought to secure 20 megawatts of power on demand, but Newfoundland and Labrador Hydro informed them that it could not accommodate this request. The provincial government had previously exempted the utility from the requirement to provide power to new cryptocurrency mining ventures, allowing it to decline such demands. Blockchain Labrador did not meet the criteria for a legacy-customer exception, and there is insufficient surplus energy available. Following this setback, the company took legal action to contest the decision, but the court dismissed their claims regarding procedural fairness and statutory interpretation as unfounded.
Wider Restrictions on Cryptocurrency Mining Across Canada
Across Canada, similar restrictions are being enacted against cryptocurrency mining. In 2023, New Brunswick enacted legislation preventing New Brunswick Power Corp. from supplying electricity to new cryptocurrency enterprises, although existing contracts remain unaffected. British Columbia has implemented a permanent ban on new crypto mining projects from connecting to the British Columbia Hydro and Power Authority grid, citing concerns over excessive energy consumption and limited economic advantages relative to other sectors. Manitoba has prolonged its moratorium on new electricity connections for cryptocurrency mining until April 30, 2026, while Quebec has opted for a regulatory approach involving higher electricity rates and limits on total energy allocations instead of an outright prohibition. Collectively, these actions demonstrate a growing trend among provinces to restrict energy access for the energy-intensive cryptocurrency sector.
Attractiveness of Canada for Crypto Miners
Canada’s colder climate and affordable electricity prices make it an appealing destination for cryptocurrency miners. However, this trend is not limited to Canada; countries such as Norway, Russia, and Ethiopia have similarly halted electricity supplies for new cryptocurrency mining ventures this year. Pierre-Olivier Pineau, chair of energy sector management at HEC Montréal, noted that the trend of limiting high-demand electricity consumers, like crypto mining, is expected to persist. He remarked, “We are entering a world where we will have many new uses, including artificial intelligence. We cannot allow these disruptions.”
Challenges in Electricity Pricing and Demand Management
Pineau emphasized that structural challenges in electricity pricing are a significant reason for these restrictions. He explained, “There is an issue because our rates do not accurately reflect the cost of consumption.” Current rates are primarily volumetric, while the marginal cost of electricity production is considerably higher than the rates charged. This discrepancy creates a scenario where expanding capacity becomes costly compared to average consumer prices, forcing distributors to make tough prioritization decisions. “Investments are highly expensive, and everyone will feel the effects,” he concluded.
Emerging Power Demands from AI Data Centers
Pineau advocates for a shift towards a model where new electricity consumers bear the full costs associated with their increased energy usage, rather than relying on subsidized average rates. He argued against arbitrary judgments about energy usage priorities, suggesting that for some, cryptocurrency may be of utmost importance. However, an upcoming surge in power requirements is anticipated as data centers designed for artificial intelligence come online. In New Brunswick, VoltaGrid LLC announced that its new AI data center will demand 380 megawatts of power, with half of that sourced from a new gas-fired power plant and the other half from the NB Power grid.
