The correct measures for crypto mining, data centres

The provincial government has tabled two pieces of legislation aimed at giving Manitoba Hydro greater control over the ability of certain types of certain tech-based businesses to draw power from the province’s electricity grid. Bill 20 would permit Hydro to temporarily reduce the flow of electricity to cryptocurrency operators in order to preserve grid stability, while Bill 39 would give Hydro the authority to charge cryptocurrency operations and data centres up to double the standard rates for electricity.

We support the legislation and the government’s reasoning as to why the two bills are necessary. They reflect the fact that the need for electricity is surging in Manitoba, at a pace that could result in the demand exceeding the available supply within the next decade, if not earlier. We also agree with Finance Minister Adrien Sala’s characterization of cryptocurrency operations as “low value” components of the province’s economy, in that they provide few jobs relative to the vast amount of electricity they consume on an ongoing basis.

The minister told reporters last week that “We need to address the pressures that are being placed on the grid,” and insists that bills 20 and 39 are a necessary response to the proliferation of commercial activities that draw huge amounts of electricity, often at times when the demand on the grid is at its greatest level. The minister’s arguments are valid, but he could have also referred to the many serious questions regarding the alleged social utility and economic benefits of crypto mining.

Advocates for cryptocurrency operations contend that the industry provides essential, decentralized financial infrastructure and supports renewable energy expansion. Opponents of such businesses respond, however, that crypto mining is causing serious environmental harm throughout the world. They argue that the facilities consume huge amounts of electricity at a time when the demand for that vital commodity is rapidly increasing. Such operations, they contend, could force the construction of additional electricity production infrastructure, inevitably leading to higher electricity rates for everybody.

Many of those same arguments apply to data centres, along with the threat they often pose to local water quality and supply. For that reason, we also agree with Brandon University professor Jennifer Mateer, who told the Sun last week that “Data centres should also be required to demonstrate they are adding or supporting new clean electricity, so they are not just drawing from Manitoba’s existing energy grid.” She warns that if government commits to energy-intensive data centre development without clear conditions attached, it may become more difficult to meet climate targets or to prioritize other public needs in the future.

Another factor to consider before authorizing the construction of data centres and their access to the electrical grid — and not after they are operating — is the fact that many of those facilities perform vital artificial intelligence functions in areas such as health care and public safety. They cannot have their supply of electricity curtailed without creating the potential for harm to others. That may explain why Bill 20 would authorize the reduction in electricity supply to crypto operations, but not data centres: the potential risk of shutting down an already-operating data centre may be too great.

Given those serious concerns, we support the government’s efforts to pass these two important pieces of legislation, but we also encourage them to consider the example set by the British Columbia government and B.C. Hydro. Earlier this year, they launched a competitive process to allocate 400 megawatts of electricity to AI and data centres, with preference being given to projects offering high economic, community and environmental benefits. Adopting such an approach in Manitoba could help to ensure we reap the benefits of in-province data centres, while also minimizing potential risks.

We cannot ignore the worldwide proliferation of digital business operations and the growing need for them. We can ensure, however, that the industry’s growth in Manitoba occurs in a manner that is safe, sustainable and does not jeopardize Manitobans’ access to electricity. Bills 20 and 39 are a good first step toward achieving that objective.