Amping Up The Rules: BC To Regulate Crypto-Mining Electricity Use

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On May 7, 2024, the Province of British Columbia (the "Province" or "BC") enacted Bill 24, Energy Statutes Amendment Act, 2024, 5th Sess, 42nd Parl, British Columbia, 2024 ("Bill 24"). Upon receiving royal assent on May 16.
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On May 7, 2024, the Province of British Columbia (the "Province" or "BC") enacted Bill 24, Energy Statutes Amendment Act, 2024, 5th Sess, 42nd Parl, British Columbia, 2024 ("Bill 24"). Upon receiving royal assent on May 16, Bill 24 amended the Utilities Commission Act (the "UCA") to enable the Province to enact regulations regarding public utilities' provision of electricity service to cryptocurrency miners. Until regulations are published, the implications of this broad power to regulate power supply for Cryptocurrency mining ("crypto-mining") remain an open question.

This post reviews the history and details of the proposed legislative amendments, as well as the next steps and potential implications of the Province's efforts to regulate the provision of electricity service to cryptocurrency miners.

Regulating the Provision of Electricity Service to Cryptocurrency Miners

History: Temporary Suspension, Challenge, and Consultation

Crypto-mining involves specialized computers that create new cryptocurrency "coins" by solving mathematical problems. The computers run continuously and require significant amounts of power to operate and prevent overheating.

In December 2022, the Province directed the British Columbia Utilities Commission to effectively suspend new electricity connections for crypto-mining projects for 18 months – until the end of June 2024. As a result, twenty-one projects – requesting a total of 11,7000 gigawatt hours per year, equivalent to the energy needed to power hundreds of thousands of homes – were impacted. The introduction of this temporary suspension coincided with the release of BC Hydro's report outlining the perceived challenges that crypto-mining posed to BC's clean energy transition.

One company affected by the December 2022 suspension, Conifex Timber Inc. ("Conifex"), has two projects at the front of the queue to be connected to the electrical grid. Conifex challenged the Province's direction to suspend new electricity connections, arguing that the direction was unduly discriminatory and unreasonable. In its February 2024 decision, Conifex Timber Inc. v. British Columbia (Lieutenant Governor in Council), 2024 BCSC 177, the BC Supreme Court held that differentiation based on economic or cost-of-service reasons, which can include unique electricity consumption characteristics, does not constitute undue discrimination.1 Additionally, the Court held that the Province's direction was consistent with the purposes of the UCA, which included regulation of public utilities so that the general public is well served by those utilities.2 The Court therefore dismissed Conifex's challenge. In March 2024, Conifex appealed the Court's decision to the BC Court of Appeal and the decision remains under appeal as of the publishing date of this blog post.

During the suspension, in the summer of 2023, the Province engaged with BC First Nations, municipalities, utilities, industry associations, and the crypto-mining industry to seek feedback on the development of a permanent crypto-mining electricity connection policy. The Province has not reported on the outcomes of this engagement.

May 2024: Amendments to the UCA

The amendments to the UCA found in Bill 24 will allow the Lieutenant Governor in Council (the "LGIC") broad powers to make regulations respecting the provision by a public utility of electricity service for the purpose of crypto-mining. Specifically, the LGIC could make regulations including:

(a) prohibiting, for a specified period or indefinitely, a public utility from supplying service for the purpose of cryptocurrency mining;

(b) setting a rate, or requiring the commission to set a rate that establishes the following in relation to energy or capacity supplied for the purpose of cryptocurrency mining:

  1. the charge to be paid for energy or capacity supplied;
  2. limits on the amount of energy or capacity that may be supplied;
  3. when service may be supplied;
  4. conditions that must be met to be entitled to receive service from a public utility;

(c) enabling a public utility to collect from its customers the costs it incurs or the revenue forecasted to be lost as a result of a regulation under this proposed section; and

(d) defining cryptocurrency and cryptocurrency mining.

The Bill 24 amendments expressly permit unique regulations for different persons, places, activities, or circumstances or different classes of persons, places, activities or circumstances.

Next Steps and Implications

Bill 24 received royal assent yesterday, and accordingly is now in force.

The amendments to the UCA will give the LGIC very broad power to regulate what the Province views as an "energy-intensive" industry "creating very few jobs or economic opportunities" for people in BC. However, until regulations are published the implications of this power to regulate power supply for crypto-mining remain largely unclear.

Both the December 2022 suspension and the amendments reflect a larger trend of jurisdictions grappling with the unique nature and level of demand for electricity of crypto-mining. Other provinces across Canada including Manitoba, New Brunswick and Quebec, as well as other jurisdictions such as China, Algeria and certain US states, have taken steps to regulate power supply and rates for crypto-mining operations (including moratoriums).

One question arising out of the move towards regulating electricity with respect to crypto-mining projects is whether the Province could begin to regulate the availability of electricity for other industries in a similar manner. For example, during debate on Bill 24 on April 24, 2024, Green Party Leader Sonia Furstenau advocated for the extension of similar regulations to the liquefied natural gas ("LNG") industry in British Columbia, arguing that the LNG industry shares similar characteristics with crypto-mining. We understand that during the consultations with industry, certain participants argued that, if the provision of energy is to be based on the same factors as are being utilized in regulating cryptocurrency (i.e., the amount of energy needed when considered against the provision of jobs and economic opportunities provided by the activity) other emerging technologies, such as artificial intelligence, should also be subject to more restrictive energy regulations.


1 See paras 57-60.

2 See paras 47-48.

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