China’s clampdown on its crypto industry is sending miners scurrying for a new home. They’re finding one in Canada, lured by its cold climate, lots of clean, cheap power and a welcoming market for raising capital.

In Farnham, a Quebec town 35 kilometers (21 miles) north of the Vermont border, nearly 5,000 machines are packed into a former carpet factory run by Backbone Hosting Solutions Inc. The company, known as Bitfarms, says it’s earning more than $250,000 a day from minting Bitcoin, other virtual currencies and fees at four sites in the province. That makes the company, based near Montreal, a major consumer of electricity.

It’s a hot and noisy job crunching the algorithms that verify transactions for the blockchain, a secure public ledger. Miners win crypto coins for solving problems the fastest and their rigs create a roar like a jetliner on take off. Outside, average January temperatures of -10 degrees Celsius (14 Fahrenheit), help reduce cooling costs.

“There’s a very clear opportunity to find a lot of energy at good prices, and we have the perfect weather to mine,” Emiliano Grodzki, said in a recent tour of the Farnham facility. He’s one of Bitfarms’ four founders, two Quebecois and two Argentines who met on an online chat. “And the energy is clean.”

China — home to about three-quarters of the machines plumbing the blockchain — dominated the scene until the Communist government halted trading of virtual currency, banned initial coin offerings and shut down mining in recent months. Some of the most influential companies in the new crypto economy, whose roughly 1,500 digital currencies were worth about $405 billion on Friday, are discovering the Great White North.

Beijing-based Bitmain Technologies Ltd., the world’s biggest Bitcoin mining organization, operates in Quebec, while BTC.Top, the largest mining collective, is opening a facility in Canada, the founders said. After scouring the globe, Amsterdam-based Bitfury Group Ltd. found that Drumheller, Alberta — where dinosaurs once roamed — is one of the most profitable places in the world to chase digital coins. The largest Bitcoin miner outside of China has set up 58 megawatts of data centers there, a third of its global capacity, according to an investor presentation.

The largest variable cost in crypto mining is electricity. Chinese miners gained an edge thanks to cheap coal-fired power and a system that allowed them to skirt taxes and grid fees, according to Bloomberg New Energy Finance. With electricity demand from crypto miners set to exceed that from electric vehicles in coming years, the hunt for new markets is narrowing to Canada and a handful of Nordic countries, Bloomberg Intelligence analyst Elchin Mammadov said in a report.

Comparing costs across geographies is tricky because taxes, distribution charges, labor and transport costs can greatly swing the bottom line. Iceland has attracted major miners, including Bitfury and Genesis Mining Ltd., builder of the world’s largest ether mining facility. Norway stands out as having the lowest industrial electricity prices among advanced economies, according to data from the International Energy Agency.

In Canada, Hydro-Quebec was quick to lay out the welcome mat. The country’s largest hydroelectricity generator, which earlier lured Amazon.com Inc. and Microsoft Corp. data centers to the province, was in talks with about 30 crypto miners in early January, according to Hydro-Quebec spokesman Marc-Antoine Pouliot.

Less than three weeks later, that number had swelled to over 100 fueled in part by the flood of Chinese miners seeking to move their rigs elsewhere. The utility has a surplus for provincial needs alone of 10 terawatt-hours or enough to power 600,000 homes – for a decade.

By https://www.bloomberg.com