Canada: the ban on crypto mining in British Columbia is legal

In Canada, a story directly related to the ban on crypto mining has come to an end. 

The incident took place in British Columbia, the westernmost province of Canada where the city of Vancouver is located, and it only concerns this province. 

The ban on crypto mining in Canada

The provincial electric company, British Columbia Hydro and Power Authority (BC Hydro), had initiated an 18-month moratorium on crypto mining.

A local crypto mining company, Conifex Timber, has decided to challenge the moratorium in court, and has lost. Conifex Timber is a forestry company that has also started crypto mining operations with the indigenous Tsay Keh Dene tribe.

In fact, a few days ago a judgment was issued that favors BC Hydro electric company and goes against Conifex Timber.

The ruling was issued by Judge Michael Tammen of the Supreme Court of British Columbia in Vancouver, and rejects the appeal of Conifex Timber against British Columbia regarding the order issued by the Lieutenant Governor in Council (LGIC) of British Columbia itself, which ordered the BC Utilities Commission (BCUC) to issue orders that exempt BC Hydro from its obligation to provide services to crypto mining companies for a period of 18 months.

Therefore, the judge ruled not only that it is legitimate for BC Hydro to refrain from providing electricity to Conifex Timber for 18 months, but also that it can do so with all the other companies in the territory that deal with crypto mining. This effectively confirms the moratorium.

The LGIC order dates back to December 2022, as well as the BCUC order that exempted BC Hydro from providing services to new mining activities. As a result of this decision, two Conifex Timber data centers were disconnected from the BC Hydro distribution network.

It should be noted that BC Hydro is a publicly owned utility of the government of British Columbia.

Reasons for the judgment

The reasons that led to this sentence are three. 

The first, simply put, is that LGIC’s decision is legal, since it is a public service and the ultimate responsibility for the province’s energy policy lies with the same government that owns BC Hydro.

The second one is of a formal nature, since Conifex Timber claimed that there was a procedural defect that the judge did not find.

The third one is the correspondence of the provincial laws with the United Nations Declaration on the Rights of Indigenous Peoples, which Conifex Timber had raised doubts about. 

In other words, being a decision on energy policy of the province, for which the government is solely responsible and has full sovereignty, it is not contestable, in the absence of formal defects or non-compliance with higher laws. 

This is therefore a legitimate political choice. 

The reasons for the crypto mining ban

The detailed reasons behind the decision of the British Columbia government to ban crypto mining for 18 months are not known. However, they can be inferred. 

It certainly is not about environmental reasons, because BC Hydro produces electricity with as many as 32 hydroelectric power plants, and only 3 natural gas plants. 95% of the energy consumed in the province of British Columbia is produced by hydroelectric power plants, therefore without harmful emissions and from renewable sources. 

It should therefore only be a problem of consumption and costs. 

BC Hydro has a total capacity of 11 GW, providing electricity to over 4 million people. 

Canada is definitely a cold place, so electricity consumption can be high. In total, BC Hydro produces around 50,000 GWh of electricity per year, so on average the 11 GW are used at about 50% of the maximum theoretical capacity. 

Judge Tammen, however, wrote in the sentence that the ban was indeed related to the cost of electricity and aimed to preserve affordable access to energy for the entire population.

He added that the total amount of MWH that Conifex Timber’s mining facilities would absorb would far exceed BC Hydro’s projections. 

Since it is only a few MWh per year, compared to the 50,000 GWh produced, the problem was probably not so much the consumption itself, but BC Hydro’s difficulty in carefully planning it.

In percentage, it would have been a negligible consumption, but the public company for the production and distribution of electricity could have had problems managing the peaks of absorption of the system at the moment of ignition.