Blockchain and Cryptocurrency

Reflections on a year in Economic Development in Alberta – Part 6

Like many people, I became interested in cryptocurrencies and blockchain technology over the past few years. And I’m happy to report that I sold everything at the top and have just specced out and ordered a new Lamborghini. 

Just kidding. I HODL’ed cause I got those diamond hands but WAGMI (if you don’t get that, congratulations on dodging this whole thing). 

There are several different interesting components of the blockchain/crypto world that could really take hold in Alberta. The mining side of the equation is just a small part of the overall blockchain industry, but it could work well here.

Crypto mining is essentially a process to convert electricity into cryptocurrency, so the cheaper your electricity input costs, the more economical the operation. Alberta’s deregulated electricity market means that you can generate electricity on-site at an industrial facility to use in whatever process the facility is for, and save the transmission costs of the power. Have a look at your power bill to see how much of it is transmission costs. Maybe half. Many large industrial facilities in Alberta use a co-gen power supply model, and it can be a significant cost advantage when large amounts of electricity are required.

Our cheap and abundant natural gas can be used to generate electricity relatively cheaply, and our cold weather can be helpful in cooling the servers used in crypto mining. The attention that’s been paid to the environmental impacts of crypto mining mean that investors are looking for “green crypto” options, and it’s possible that we’ll start to see individual crypto tokens identified as mined with green power and have that provenance recorded on the blockchain. Could Alberta be the home to a green crypto industry, where natural gas co-generated power is used to run the miners, and the CO2 produced in the electricity generation process is sequestered in our porous geology? There could be something really interesting there.

Crypto mining is just one small part of the blockchain ecosystem, but if it gets a strong toehold here, there are many other parts of the ecosystem that could develop in concert. 

And on that note, the Government of Alberta recently passed the Financial Innovation Act, designed to spur innovation in the finance sector. It establishes a regulatory sandbox for finance and fintech companies, which will allow companies a temporary exemption from regulations for a set period of time. One can imagine the possibility of financial blockchain companies coming to Alberta to work on a product within the regulatory framework of the “sandbox”, and staying here if the idea is viable. 

The whole crypto/blockchain industry is so new we don’t really know what it will look like in the decades to come. From my point of view, Alberta has some very desirable attributes that might make us a major hub for this sector within Canada, if things break a certain way.