The Manitoba government is temporarily halting any new connections of cryptocurrency operations to the hydroelectric grid, citing a potential for overwhelming energy demands and low economic return.
The 18-month pause will not affect the 37 current operations in the province, but will temporarily halt a growing number of requests from operators who have the capacity to consume a sizable portion of the province’s electricity supply.
“We can’t simply say, ‘Well anyone can take whatever (energy) they want to take and we’ll simply build dams,'” Finance Minister Cameron Friesen, the minister responsible for Crown-owned Manitoba Hydro, said Monday.
“The last one cost $13 billion if you priced in the (transmission) line.”
The technology that underpins cryptocurrencies — blockchain — requires a large amount of electricity to run complex financial transactions. Manitoba is an attractive place for high-energy users, as it has traditionally had the second-lowest electricity rates in Canada, behind Quebec.
Hydro-Québec earlier this month announced it was asking its provincial regulator to suspend the energy allocation process to the blockchain industry.
Friesen said there have been recent requests to Manitoba from another 17 operators that would require 371 megawatts of power — more than half the power generated by the Keeyask generating station, which became fully operational earlier this year.
There have also been other, less formal inquiries, Friesen said, which would total more than 4,600 megawatts.
Manitoba Hydro is still carrying debt from its last series of construction work. The utility saw its debt triple in 15 years as it built two megaprojects, the Keeyask generating station and the Bipole III transmission line, which ran a combined $3.7 billion over budget.
Part of the Progressive Conservative government’s concern is that blockchain operations may not produce many jobs, Friesen said.
“You can be utilizing hundreds of megawatts and have a handful of workers.”
The vice-president of the Canadian Blockchain Consortium, an industry group, said high-paying jobs are involved in operating the servers.
“Somebody’s going to have to service them, check on them, make sure they’re running,” Jade Alberts said from Calgary.
Blockchain operators also have the ability to adapt to the needs of the grid, he said. Operators in Texas shut down when extreme heat or cold push energy demand among Texas residents high, he said.
The Manitoba government’s review is to analyze, among other things, the economic impact of cryptocurrencies and a potential for a regulatory framework for approving new large connections to the grid.
“Manitoba Hydro (currently) cannot make discretionary decisions about who to hook up,” Friesen said.
“If we have a new Tim Hortons in downtown Portage la Prairie … and we have a mine with 500 employees, there is a queue that must be respected.”