A provincial supreme court judge in British Columbia has deemed B.C. Hydro’s moratorium on crypto mining projects reasonable, according to a ruling posted on Monday.

The moratorium, initially enacted in December 2022, faced a challenge from Conifex Timber, a forestry company diversifying into crypto mining, which had plans for a mining operation with the Tsay Keh Dene Nation, an indigenous tribe.

The ruling, delivered by Justice Michael Tammen on Friday, deemed the government’s move in December 2022 to pause new connections for cryptocurrency mining for 18 months as “reasonable” and not “unduly discriminatory.”

He noted that B.C. Hydro’s ban was grounded on a cost-of-service basis, considering the significant energy demands of cryptocurrency mining and aiming to maintain affordable energy access for the broader population.

BC Government Pauses Crypto Mining Amid Electricity Consumption Concerns

Conifex Timber Inc., a forestry firm venturing into cryptocurrency mining, had challenged the policy in court, seeking to have it declared invalid.

However, BC Hydro CEO Christopher O’Riley testified that the proposed data centers by Conifex would consume an astounding 2.5 million megawatt-hours of electricity annually, enough to power and heat over 570,000 apartments.

Energy Minister Josie Osborne cited the “massive” electricity consumption of cryptocurrency mining and its limited job creation as reasons behind the policy. Highlighting the unique electricity consumption characteristics of cryptocurrency mining centers, Justice Tammen stated, 

“The evidence amply establishes that cryptocurrency mining centers have unique electricity consumption characteristics… The total amount of megawatt hours that would have been required to service all the interconnection requests from cryptocurrency operations in 2023 grossly exceeded the projections of BC Hydro.”

However, before the government’s decision, B.C. Hydro released a report outlining the challenges they pose to the utility provider. The report highlighted how power demand from cryptocurrency mining operations could conflict with clean energy and electrification goals, especially as the adoption of electric vehicles and heat pumps increases.

The court ruling emphasized that connection requests from cryptocurrency miners in B.C. far exceeded B.C. Hydro’s projections, prompted the government to initiate the pause. The purpose of this pause was to prevent a scenario where a large proportion of the available electrical power supply was dedicated to one industry, potentially resulting in increased costs for other residential and industrial customers in the province.

Furthermore, the province is already taking steps to transition more households to electrical heating and promote the use of electric cars. It also anticipates increased electricity demand from industrial projects, including hydrogen power projects and new mines.

Conifex Timber Wanted 2 new B.C. Mines

Energy Minister Josie Osborne explained in an interview with CBC last year that the moratorium on new crypto-mine projects aimed to provide time for consultations with the industry to ensure that energy resources are utilized optimally. The goal is to prioritize the best future electricity usage opportunities.

However, Conifex Timber expressed disappointment, believing that the continued ban represents a missed opportunity for the province. The company emphasized potential benefits such as improved energy affordability, technological innovation acceleration, and strengthened power grid reliability and resiliency, contributing to more inclusive economic growth.

The company had planned to establish new cryptocurrency mining operations in Salmon Valley and Ashton Creek. Still, according to the company’s claims, the government’s pause halted negotiations, resulting in ongoing losses and damages.

The pause on negotiations for new cryptocurrency projects was initiated pending a study of the industry’s economic and environmental impacts. The move aligns with similar actions other Canadian provinces took to regulate cryptocurrency mining operations, reflecting concerns about energy consumption and job creation.

This ruling in British Columbia comes amid similar regulatory actions globally, including New York State’s imposing a two-year moratorium on crypto mining in November 2022. However, British Columbia is also home to environmentally friendly crypto mining projects like Ocean Falls Technology, which operates off-grid and utilizes orphaned power from a hydroelectric plant in an abandoned mining town, contributing to a zero-carbon footprint.

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