To date, Canada has been fairly forward thinking and accepting of the blockchain industry. A large part of the industry is mining. With many coins relying on a proof-of-work protocol, mining is as prevalent as it has ever been. Areas that provide cheap electricity and a cooler climate are perfect for those interested. Since the process relies on the computational power of many processors working non-stop, the electrical demand and heat produced can be massive depending on the outfit.
In late 2017 a company named Hut 8 (which is backed by BitFury) struck a deal with the city of Medicine Hat. Located in northern Alberta, the city was the ideal location due to climate and acceptance. The deal was a win-win as the company was to infuse roughly $100 million CAD into the local economy. In compensation the company received a land deal, and access to 42 megawatts of power. The deal struck has a duration of 10 years. To learn more about the Medicine Hat project, click HERE.
Launching operations in December of 2017, the company has been actively mining Bitcoin ever since. Roughly six months later, and they have successfully mined over 1300 BTC. They have done so at an average cost of $2615 CAD per BTC. Even with prices of BTC dropping drastically to $9800 CDN, this is still a decent profit.
The plans are not finished though. By September there will be an additional 40 blockboxes, bringing the total to 57. The current 17 that are in operation are located in Drumheller, Alberta. This jump in size represents over a 300% growth in current mining capabilities. A blockbox is a contained mining unit manufactured by BitFury, utilizing the form factor of a shipping container. These units and the software that drives them are proprietary and exclusively available to Hut 8.
In April 2018, Hut 8 promoted Andrew Kiguel to the role of CEO. Andrew has gone on to state, “We believe our City of Medicine Hat Facility will represent operational excellence and set a new global benchmark for industrial scale cryptocurrency mining operations”.
Although early adopters were able to profitably mine their BTC on simple laptops, this is no longer the case. As the network grows and adoption increases, so does the difficulty of mining. The POW protocol used in mining is adaptive. The more people mining, the more difficult the computations that must be completed. This leads to decreased efficiency in the process. This also aids in bringing value to the digital coins, as the more people are invested in the network financially, the more people pay as the see this investment as a store of value.
There are many that believe the current model of mining traditionally used by cryptocurrencies is unsustainable. This is due to the sheer amount of resources required to profitably mine. Many new coins being developed have decided to go different routes with their protocols, relying on multiple alternatives. In recent months we have seen the rise of Proof-of-Stake, Delegated-Proof-of-Stake, Proof-of-Importance, and many more. Only time will tell which of these methodologies will strike the right balance and achieve mainstream adoption.