GoldMinerPulse - Bitcoin mining in BC

British Columbia is Probably Not the Best Location in Canada for Bit Coin Mining

World Power Rates - The Competition

January 23, 2018 update - Hydro-Quebec Unable to Meet Energy Demand From Cryptocurrency Miners

Hydro-Quebec, the largest state-owned utility in Canada, appears unable to meet the electricity demand from cryptocurrency miners seeking to establish operations in the energy-rich province. The announcement comes just weeks after the company sought to entice virtual currency miners as a means to bolster the province's economic outlook, claiming that it had 5,000 megawatts of power to spare.

January 11, 2018 update - Small Washington Town is Becoming a Bitcoin Mining Epicenter

January 10, 2018 update - Quebec Lures Cryptocurrency Miners as China Sours on Industry

A quick look at what British Columbia / Manitoba / Quebec face if they want to attact cryptocurrency mining operations follows.

My roughcut review of British Columbia rates shows BC Hydro power rates are not competitive on a world basis for the important cryptocurrency mining space. The state of Montana in the USA, Iceland and Sweden all have an edge over Canadian provinces. Per Manitoba studies which I link to below, Manitoba and Quebec both edge out BC but in my roughcut review are likely still not competitive with Montana, Iceland or Sweden.

Montana - Electricity Local Site Viewed January 4, 2018

Iceland - Landsvirkjun News Release on Power Costs

Sweden - Business Sweden News Relase on Power Costs

Hydro Costs In Vancouver, BC

The cost of power is a key factor for settting up a successful cryptocurrency mining operation. US$0.04 / kWh is often quoted as an upper bound for the power costs incurred by a best-in-class operation. HASHCHAIN Technology (KASH.V), which is setting up a cryptomining operation in Vancouver, is the latest company to put forward this figure as its cost of power. According to HASHCHAIN's website, viewed on December 22, 2017:

Based on a roughcut analysis using BC Hydro's published rates as of December 2017, US$0.062 / kWh would be a more realistic lower bound for a full scale operation in Vancouver.

December 30, 2017 update: if Bitcoin prices continue to drop as they have been going in the end of 2017, power costs will become very significant. BC Hydro rates will not be competitive with those in Iceland, where a US$0.043 has been available since 2011 and can be fixed for 10 years.

The power cost factor is huge when Bitcoin prices plunge -- an operator such as HIVE.V, with power rates at US$0.043 per kWh can remain nicely profitable with Bitcoin at US while an operation such as KASH.V paying BC Hydro rates (best large scale rate US$0.062 as I estimate in this blog), will be forced to shutdown or move out of BC. (January 4, 2018 KASH announces plans to ramp production at a new facility in Montana, and not Vancouver.)

My roughcut estimate of hydro costs derives from estimating the marginal cost of adding an additional rig to a cryptocurrency mining operation.

My analysis of BC Hydro costs is more pessimistic than a survey of Canadian electricity bills completed by Manitoba Hydro. The Manitoba study is likely based on more traditional industrial usage assumptions- the best large-scale industrial usage in the study was US$0.05 kWh. However, given the specialized nature of a cryptocurrency mining operation, I believe my roughcut estimate of US$0.062 / kWh is more realistic.

Best Case Estimates for BC Hydro Charges

Basis For Estimate

Let's estimate the marginal cost, measured in US$ per kWh, of adding an additional rig to a large-scale mining configuration. The working assumptions for the operation and rig addition are as follows:

This is the most optimistic rate since it ignores likely charges, such as the cost of installing and the on-going maintenance of a customer premises transformer to handle the power loads required by a full-scale operation.

Reviewing a sample monthly hydro bill provided by BC Hydro (see below) for a large commercial customer shows the following costs are important for adding an additional rig to an operation:

Bill Line Item Unit Cost 1 Rig Extra Billing Notes
  • 5 Basic Charge
na C$0
  • Adding more rigs does not affect this line item
  • 6 Energy Charge
C$0.05500 / kWh C$51.48
  • 1.3 kW/h * 24 hrs * 30 days * C$0.055 / kWh
  • 7 Demand Charge
C$11.21 / kWh C$14.57
  • C$11.21 / kW * 1.3 kW
  • Assumption is 24 * 7 operations, therefore the extra rig will bump the demand by its hourly power draw.
  • 8 kVarh:Power Factor
na C$0
  • Adding more rigs does not affect this line item.
  • 9 Rate Rider
5% C$3.30
  • 0.05 * ( 51.48 + 11.21)
  • 10 GST
5% C$0
  • GST rebate should be available, so it is excluded
  • 10 PST
7% C$4.85
  • 0.07 * (51.48 + 14.57 + 3.30)
  • 1 Rig Monthly Billing Increase
computed C$74.21
  • 53.625 + 14.57 + 3.30 + 4.85
  • kWh rate est.
computed C$0.0793 kWh
  • C$74.21 / (1.3 * 24 * 30)
  • US$ kWh rate est.
computed US$0.062 / kWh
  • C$0.0793 * 0.78

Manitoba Hydro Rate Study

Per a May 1, 2017 study from Manitoba Hydro survey of Canadian electricity bills, the best case estimate for BC Hydro General Service

I believe, but have not confirmed, the Manitoba study rate numbers exclude PST. It also isn't clear if the study was inclusive of the BC Hydro Rate Rider.

Conclusion and Discussion

US$0.062 per kWh is my estimate for the most optimistic hydro rate assuming December 2017 BC Hydro rates for large commercial users.

The Manitoba study is very likely based on traditional industrial / commercial power usage and may not be representative of a cryptocurrency mining operation with dedicated machines running 7 * 24 computing hash keys. I believe that my roughcut analysis based on an incremental addition of one more rig to a large scale mining operation makes for a better estimate.

My roughcut analysis is valid for December 2017. Additional factors not considered but that could impact a 2018 / 2019 hydro rate in Vancouver include (list is not exhaustive):

Note: Large General Service Rate (BC Hydro Screen Snapshot)

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