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- Bitcointransactions are enabled by so-called bitcoinminers, who are rewarded for digitally checking transaction records with newly minted bitcoins.
- China is home to the world’s biggest bitcoinminers but is cracking down on the sector due to concerns about excessive energyusage.
- At the same time, Canada is actively courting bitcoinminers as regions like Quebec have excess power capacity.
- Other countries like Kazakhstan and Venezuela are also said to be courting miners.
Several industrysources Business Insider spoke to this week said that bitcoinminers are thinking of moving to Canada after lobbying from the country’s energyindustry. Quebec specifically has been wooing bitcoinminers in the hopes of boosting local economies.
Reuters reported on Friday that Bitmain, the world’s biggest blockchainminingcompany, is looking at moving operations to Canada and said utility company Hydro Quebec is in talks with around 30 large cryptocurrencyminers about potential moves. BTC.Top, another major miner, is also setting up shop in Canada.
“We’ve seen a lot of movement towards Canada,” Chris Keshian, the CEO of San Francisco-based Apex Token Fund, a fund of cryptohedgefunds, told Business Insider. “The Canadian government is relatively friendly towards cryptocurrencies [and] energy is relatively cheap there.”
Bitcoinmining involves computers completing complex cryptographic problems in return for newly “minted” bitcoins. The process, which could theoretically be carried out by anyone, is an essential part of the bitcoinnetwork, allowing transactions to happen.
To ensure transactions are not falsified or records of ownership changed, participants of the bitcoinnetwork must sign off on transactions in “blocks” that are recorded in a decentralized database known as the blockchain. These blocks are checked and sealed by the bitcoinminers, which do the cryptographic work. In return, they are rewarded with bitcoins.
While the system is designed to be decentralized, around 5 large “mining pools” controlled by a handful of companies dominate about 75% of the market. These mining pools, the bulk of which are in China, use huge amounts of power. The amount of energy used by computers “mining” bitcoin last year was greater than the annual usage of almost 160 countries.
Arthur Hayes, the CEO of Hong Kong-based crypto derivatives tradingplatform BitMEX, told BI: “Some of the people that I’ve spoken to, they’ve been de-risking their Chinese mining exposure in the middle of last year.
“The large miners have been relocating operations around the world in anticipation of a possible crackdown. Miners are cognisant of the fact that they have too much exposure to having operations in China and are relocating equipment and operations to outside of China.”
‘A good parallel would be putting in oil mining rigs’
Quebec is one of the largest hydroelectric power producers in the world and routinely produces a surplus meaning electricity is cheap. A cold climate also makes computer cooling costs lower and Canada’s political stability also makes it attractive.
Chris Keshian, CEO of Apex Token Fund.Apex Token Fund
David Vincent, businessdevelopment director at electricity provider Hydro Quebec, told CoinDesk in a recent interview that a campaign to lure tech giants to the region launched in 2016 in fact attracted the bitcoinminers.
Other countries like Kazakhstan, traditionally a mining powerhouse, and Bhutan trying to woo bitcoinminers. Hayes said. Sources BI spoke to said South American countries such as Venezuela and Chile are looking at the space.
“It actually makes a lot of economic sense in a lot of these hollowed-out, commodity producing, high industrial areas. You have power plants serving this commodity producer that can’t stay open anymore.”
Joseph Bradley, an analyst at Apex Token Fund, told BI: “What’s really interesting, and what we think that this signals, is that more developed countries are starting to understand that blockchain is infrastructure and these systems are absolutely digital infrastructure.”
Keshian said: “This is effectively unlocking a huge amount of value globally and the countries that learn how to unlock that value and capture it stand to benefit substantially. A good parallel would be putting in oil mining rigs.”
“These guys need forecastability,” Bradley said. “It is not easy moving mining operation.”
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