A New Bitcoin Mining Hub? If Not Alberta with the 4th largest Oil Sands Reserves in World, then Who?
With richness in natural energy producing resources, cold climate, and forward looking government Alberta is uniquely positioned as a natural home for Bitcoin mining. In this article, I discuss why Alberta has the potential to become a global Bitcoin mining hub.
A Natural Resource Powerhouse
Although total energy consumption of Bitcoin network around the world is estimated to be less that 0.5% of global energy usage, large amount of low cost and reliable electricity is the biggest single requirement for the build of Bitcoin mining facilities. Due to its location agnostic feature, Bitcoin miners can locate their facilities near remote wind and solar farms hence utilizing renewable energy for 56% of their energy consumption. Alberta has abundance of low cost and excess energy and can be a great home for new Bitcoin mining facilities.
Oil: Canada is the fourth largest oil producer in the world. In 2020, Alberta produced 3.79 million barrels per day (MMb/d) of Crude oil, accounting for 80% of total Canadian production.
Natural Gas: In 2020, Alberta’s natural gas production averaged 9.72 billion cubic feet per day (Bcf/d) representing 63% of total Canadian natural gas production in 2020.
Renewables: In 2019, Alberta generated 76.1 terawatt hours (TW.h) of electricity , which is approximately 12% of total Canadian generation. Renewable sources like Wind and Solar accounted for 10% of total electricity generation. Share of renewables in Alberta's electricity generation increased to 13% in 2022.
Cold Climate, Something to Brag About When it Comes to Bitcoin Mining
Managing heat is a big challenge for large scale Bitcoin mining facilities. It can get very expensive in hot and dusty climates adding to the already intensive capital that is required to build a Bitcoin mine.
Alberta average temperature is less than 20 degrees Celsius in 9 months of the year. This allows Bitcoin miners to take advantage of fairly simple air cooling systems to cool down their mine which reduces the initial capital investment significantly compared to expensive and complicated alternatives such as immersion cooling that are being utilized in hot and dusty climates.
Competitive Business Jurisdiction with Forward Looking Government
Alberta has historically had a strong economy and is considered a business-friendly jurisdiction with a vibrant entrepreneurial culture. It has the lowest provincial business income tax in Canada which makes the province very attractive for businesses operating in the province.
Alberta has a Red Tape Reduction Ministry. The goal for having such a ministry is to cut red tape by one-third to reduce costs, speed up approvals, and make life easier for hard-working Albertans and businesses. Minister Dale Nally, Minister of Service Alberta and Red Tape Reduction attended a trade mission from Alberta to Texas organized by Canadian Blockchain Consortium to promote Alberta's Bitcoin mining.
Alberta will become "the richest jurisdiction on the planet" if it fully embraces Bitcoin mining. Danielle Smith, Premier of Alberta
Deregulated Electricity Market
Alberta has abundant natural resources, including significant reserves of natural gas and wind and solar power which causes the electricity cost to be relatively low compared to other provinces in Canada. The province has a deregulated electricity market, which means businesses can negotiate competitive electricity rates.
Alberta Electricity System Operator (AESO) who manages and operates Alberta's provincial grid, procures Operating Reserve (OR) from generators or loads to maintain system reliability when there is an unexpected imbalance between supply and demand. Bitcoin miners are best suited to participate in the demand response programs compared to other flexible loads. Bitcoin miners can take advantage of such programs and make additional revenue from selling their power back to grid.
With a politically stable and forward looking government and diverse and natural power sources, Alberta offers a unique opportunity to Bitcoin miners who are looking to expand and diversify their operations.