Digital currency mining continues to cement itself as an industry of its own, accounting for millions of dollars in revenue each year. With many large digital currency mining companies now operating in Canada, both investors and pioneers are left to consider the role of the country’s mining farms in the ‘bigger picture’ of the digital currency industry.
The function of mining in digital currencies like Bitcoin is to serve as a solution to keep the payment platform decentralized. Miners are incentivized to temporarily donate their computer’s resources through transaction fees, and these resources are used to verify pending transactions on the network. The more resources devoted to the mining practice, the more the miner’s potential reward. In taking advantage of this, companies create huge ‘farms’ composed of hundreds of devices, all dedicated to around-the-clock currency mining. In Canada, some of the largest examples of this practice include companies like HIVE, Bitfarms, and Hut 8.
In the face of a new industry, Canada’s major mining farms are still continuing to cement themselves. Currently, there are several multi-million dollar companies already operating in the space, each aiming to establish themselves - and Canada - as a world leader in digital currency mining.
Having recently launched on the TSX Venture Exchange (TSXV), Hut 8 now claims to be the world’s largest publicly traded digital currency mining company. Based in Toronto, it receives supporting proprietary hardware, software, and operational guidance through an exclusive partnership with international blockchain company, Bitfury.Together, the two companies represent a major player currently operating in the industry. Moving forward, Hut 8 hopes to establish itself as a mining leader in the continent, a goal it hopes to achieve with its newly announced president and CEO, Andrew Kiguel. “Kiguel brings with him more than 20 years of capital markets experience along with a deep knowledge of the blockchain industry,” the company said in a press release. “We look forward to his leadership as we continue to grow our operations in Canada and establish Hut 8 as the leader in North American mining."
Another major player in Canada’s current currency mining landscape is Backbone Hosting Solutions, also known as Bitfarms. The Montreal-based company owns and operates mining farms across Canada, for the networks of various digital currencies.In December 2017, Israeli company Natural Resources Holdings announced it was acquiring a 75% stake in Bitfarms. According to Bloomberg, the move skyrocketed the stock value of the Israeli firm by nearly 160%. However, the merger is still in progress. Currently, Bitfarms is investing $250 million CAD for the creation of a bitcoin mining company in Sherbrooke, Québec. Bitfarms already operates farms throughout the province, and says the move has the potential to create 250 jobs in the area.
Vancouver-based HIVE Blockchain Technologies was one of the first publicly traded stocks to provide exposure to digital currency mining. HIVE is now one of Canada’s major players in the digital currency space, and originally began as a gold mining company. Last year, the company raised $88 million CAD in three financing rounds, which included the re-investment of more than $12 million CAD from its co-founder, Genesis Mining.Now, the company hopes to increase its market prevalence through the continuation of its services and international expansion. “HIVE continues to execute on its aggressive growth strategy to maintain its position as a market leader in the blockchain infrastructure industry,” HIVE stated in a recent operational update.
Digital currency mining requires a substantial amount of energy consumption, and this is multiplied in the case of mining farms. This means that in order to stay profitable, companies actively seek locations where they are offered low prices on electricity.While this led to the current boom in Canadian mining operations, critics and government officials raise questions about the potential costs to infrastructure and the environment. Further, Hydro-Québec announced in January 2018 that it would not be able to accommodate the potential influx of miners that expressed interest in entering the province.As mining farms increase in size, and go to similar geographical locations in search of cheap electricity, there is also a potential risk to decentralization. However, this risk is currently difficult to measure.
Ultimately, major Canadian companies aim to tackle the potential consequences of digital currency mining, and continue to grow their global presence. The prominence of these companies grants investors that wish to deal with digital currency mining several public trading options, and the current trend seems to suggest that Canada will play a significant role in the industry’s future.Image credit: pxhere
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