British Columbia Court Upholds Government’s Temporary Ban on Cryptocurrency Mining Electricity Supply

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The British Columbia Supreme Court has upheld a temporary shutdown of electricity supplies for new cryptocurrency mining operations, highlighting the government’s role in balancing energy needs with sustainability goals.

On February 2, 2024, the Supreme Court of British Columbia ruled in favor of the Lieutenant Governor in Council, upholding an Order in Council (OIC) that temporarily suspended BC Hydro’s obligation to supply electricity to new cryptocurrency mining operations for 18 the month. The ruling issued by Judge Tammen denied the petition of Conifex Timber Inc., a forestry company aiming to diversify into high-performance computing data centers primarily for cryptocurrency mining.

Background of the case

The dispute began with an OIC issued on December 21, 2022, ordering the British Columbia Utilities Commission (BCUC) to exempt BC Hydro from providing services for new cryptocurrency mining projects, affecting two of Conifex’s hub projects for data. The government’s directive is rooted in concerns about the huge demand for electricity from cryptocurrency mining operations and its potential impact on the province’s energy resources and climate goals.

Main conclusions of the court

The court found that the OIC was a reasonable exercise of the Lieutenant Governor in Council’s powers under the Utilities Commission Act (UCA). It determined that the directive did not constitute unjustified discrimination against cryptocurrency miners because it was justified on a cost-of-service basis due to the unique and significant power consumption characteristics of cryptocurrency mining operations.

Judge Tammen also addressed the procedural fairness argument, stressing that the OIC’s purpose was to temporarily shut down power to major cryptocurrency projects to allow for consultation and policy development on the industry’s energy consumption.

Consequences of the decision

This decision has significant implications for the cryptocurrency mining industry in British Columbia, signaling the government’s power to regulate utilities based on broader policy considerations, including environmental sustainability and energy conservation. It also highlights the challenges facing the cryptocurrency mining sector, which is known for its energy-intensive use, in regions that prioritize clean energy transitions and climate change initiatives.

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The ruling could prompt other jurisdictions to consider similar measures to manage the energy needs of high-demand industries like cryptocurrency mining, particularly in areas where energy resources are strained or where there is a strong commitment to environmental goals.

Future considerations

The court’s decision underscores the need for industries, especially those with significant energy needs, to align their operations with regional energy policies and environmental goals. It also highlights the importance of government and regulatory bodies in balancing industry requirements with sustainability goals and the public interest.

As the conversation around cryptocurrency mining and energy consumption evolves, stakeholders across the spectrum—from industry participants to policymakers—will need to navigate the complex interplay between innovation, economic development, and environmental protection.

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