Conversations about the growth in hashrate from North American miners focuses on the United States, specifically Texas and Wyoming. But the Canadian mining industry is booming. For this livestream, Compass talks with two executives from leading publicly traded Canadian mining companies:

This livestream is a must-watch conversation for anyone interested in understanding the full picture of North America's rapidly growing cryptocurrency mining industry.

Video Recording

Other ways to watch and read about this conversation:

Watch previous livestreams here.

Audio Version

Show Notes

What’s going on in Canada’s mining market now? (timestamp)

  • After China and the US, Canada is the second-largest producer of electricity in the world.
  • There are huge inquiries for available capacity—there’s no shortage of demand.
  • Chinese miners are still in the negotiation phase. There hasn’t been many cash transfers or hardware installations yet.
  • Chinese miners are still in the exploratory phase for relocating machines.
  • Transformer orders are seeing 50-to-55-week lead times.

Hut 8’s recent growth (timestamp)

  • Dramatic expansions in leadership team, hashrate, and hosting business
  • Starting the first phase of deploying 1,600 GH using Nvidia CMPs
  • Currently 1.3 EH, with another 1 EH scheduled for Q4 2021
  • Controlling the largest stack of bitcoin on a balance sheet of any public mining company
  • Using bitcoins held to earn yield
  • Hut 8 loves mining in Alberta—it’s climate and political regime
  • Listed on the Nasdaq now

Bitfarms’ recent growth (timestamp)

  • Nearly double the hashrate from over a year ago
  • Boatloads of new ASICs (Whatsminers and Antminers) ordered and to be installed over the next couple of quarters
  • 220 PH per month expected to be added
  • Also dual-listed on the Nasdaq, like Hut 8
  • 96% of bitcoin mined this year has been moved to Bitfarms’ corporate treasury
  • China exodus has helped Bitfarms negotiate cheaper purchase agreements
  • Huge infrastructure expansion—“the bread and butter” for Bitfarms. The bottleneck now is infrastructure, not access to ASICs.

Canadian regulation and how it affects mining (timestamp)

  • Quebec’s regulatory problems are historically known and can complicate things quite a bit.
  • Municipalities generally have more flexibility than the provincial levels of government.
  • Bitfarms spent lots of time education energy officials and politicians to better understand how mining can benefit local electricity markets.
  • Hut 8 sees a very welcoming and pro-innovation environment in the areas where its farms operate.

Will ASIC prices reach $25,000? (timestamp)

  • Jamie doesn’t think it’s very likely, but it’s possible.
  • A lot of ASIC supply being held off the market that could push prices up.
  • Lots of new companies will want exposure to mining or to self-mine as new competitors are attracted by mining profitability.
  • Ben thinks it’s a distinct possibility.
  • What happens with bitcoin’s price and how it trickles down will determine ASIC prices.
  • The faster bitcoin’s price goes up, the higher the opportunity cost of not mining becomes, which means people will want to deploy and higher and higher cost.
  • Buying ASICs is a call option on bitcoin mining.

Will China reverse course and allow miners to come back? (timestamp)

  • We’ve seen flip-flopping from China before, so it’s possible.
  • “Preferred” mining could become a practice.
  • You can’t rule out anything centered around government corruption.
  • The crackdown was about capital controls, and there could be an image risk by allowing small groups of people to mine.

What’s the plan for Ethereum mining in public markets? (timestamp)

  • Hut 8 doesn’t see direct correlations between their stock and Ethereum movements yet, but it could change when their Ethereum mining is in full production.
  • Hut 8 modeled Ethereum mining and found it to be a good bet. But they’re also able to pivot to Ethereum Classic or whatever the next most profitable coin is depending on Ethereum network upgrades.
  • Hut 8 mines Ethereum but pays out in Bitcoin.
  • Bitfarms’ founders started mining Ethereum before Bitcoin. But they prefer to only operate in the Bitcoin mining space since it’s more commoditized and predictable.

Are Canadian mining stocks still proxies for access to bitcoin? (timestamp)

  • It’s a mix of both. Historically, investors have wanted to use these companies as a proxy for bitcoin that trades as a traditional equity.
  • Investors are becoming more intelligent in differentiating between mining companies and understanding the market itself instead of just treating them as proxies.
  • Mining companies can act as a leveraged play on bitcoin, and some people understand that.
  • Very few things offer a return in bitcoin itself – dollars or yen is easy. But growing bitcoin stack with anything besides mining is very difficult.
  • Mining companies can predict how much bitcoin they will mine and how much it will cost.

Miners using financial derivatives for extra revenue and putting bitcoin to work (timestamp)

  • Hut 8 put 1,000 BTC into a yield account with Genesis.
  • Investors loved that Hut 8 are putting their bitcoins to work.
  • Hut 8 put another 1,000 BTC into a similar account with Galaxy.
  • Bitfarms hasn’t found a structure yet where they’re comfortable earning yield on their bitcoins.

Will Canada ban bitcoin mining? (timestamp)

  • It’s highly unlikely. There has been a broad recognition that bitcoin mining is here to stay.
  • Canada prides itself on innovation and its strong energy sector development.
  • Bitcoin mining is a huge opportunity for advancing both of those goals.
  • This game is emotional though, it’s not based on facts. That can be a scary world to operate in.
  • Governments that move slowly is somewhat reassuring though no matter what legislation is introduced.

Will North America ever have over 50% of global hashrate? (timestamp)

  • Ben: I don’t think we’ll ever see a single jurisdiction have over 50% of the hashrate, and that’s a good thing for its security.
  • US and Canada’s market share will rise dramatically over the next 18 months though.
  • Jamie: It’s unlikely, and even if it did happen, there are two different jurisdictions between the US and Canada that splits up hashrate.
  • Too many other jurisdictions are in play competing for hashrate.

Hosted by Zack Voell and Will Foxley