We know there are plenty of exchanges in Canada that allow users to buy, sell, and trade Bitcoin (BTC). But what about mining? Is Bitcoin mining legal in Canada? If you wanted to set up your own rig and mine Bitcoin from your home or set up a warehouse full of miners, can you do so?
Yes, you can mine all the Bitcoin you want in Canada. Of course, mining isn’t cheap. If you do decide you want to mine Bitcoin, remember that costs can add up quickly.
The good news is that as long as Canada doesn’t have a problem with Bitcoin, you can mine it to your heart’s content. Plus, you won’t have to worry about the Canadian government stepping in and shutting you down – unless, of course, you’re doing something illegal.
However, there are a few things to know before you head out and buy the first mining right you lay your eyes on.
Keep reading to learn everything you should know about mining Bitcoin in Canada – legally, of course.
You already know that it’s perfectly legal to mine, buy, sell, trade, and hold Bitcoin in Canada. To date, Canada hasn’t been too involved in Bitcoin and other cryptocurrencies.
Furthermore, the government hasn’t established many regulations or laws that dictate what Bitcoin miners, traders, and investors can or can’t do.
There are countries where Bitcoin mining is banned, including China, Iran, and India. But for now, Canada allows Bitcoin enthusiasts to mine as much as they want. Because of its openness, Bitcoin miners see Canada as a land of opportunity.
If you look at it from a purely regulatory viewpoint, you have the freedom to mine in Canada. The government won’t come knocking on your door demanding your Bitcoin mining rig. That means if you want to set up a right and start mining Bitcoin today, you’re free to do so in Canada.
Before you get started, you’ll want to take note of a few items. For starters, there are certain provinces in Canada that would prefer you don’t mine Bitcoin. This is because they are home to power companies that don’t want you to consume all their power.
If your power company requests that you not mine Bitcoin, it’s probably wise to shut down your rig or go with another company. There are stories of Bitcoin miners having their electricity shut off because they didn’t acquiesce to the power company.
Take Hydro-Quebec as an example. When Bitcoin miners crossed a certain threshold each month, the company was quick to pull the plug on them. Whether you agree with their policies or not, if you want to have electricity, it might be best to do what they ask.
By comparison, there are some power companies that are doing what they can to make life easier for those who want to mine Bitcoin. Hut8 in Alberta is one such company. They’re providing miners with the resources they need to continue mining without interruption.
As a result, many Bitcoin miners are flocking to Alberta, as it’s viewed as one of the best places in Canada to mine. Even if you decide to mine Bitcoin as a hobby, Canada is a safe place to mine.
However, unless you plan to spend a lot of money on a powerful rig, you’re probably not going to earn a lot of Bitcoin. More powerful rigs mean you’ll use more energy, which eats into your cost. And while the Canadian government won’t care how much electricity you use, your energy company might.
Of course, companies like Hut8 aren’t likely to keep you from using the electricity you need, but you’ll assuredly receive a hefty bill when it comes due.
Okay, so you know that Bitcoin mining is legal in Canada, and you know that it’s safe. You even know that if you want to have even fewer restrictions on power consumption, you should move to Alberta. But how do you start mining Bitcoin in Canada?
First, let’s take a moment and talk about what Bitcoin mining is. In its simplest form, Bitcoin mining is finding the solution to an equation. However, it’s not as rudimentary as x + 8 = 9. These are highly complex equations that require a massive amount of power to solve.
You mine Bitcoin through a computer, which is often referred to as a rig. This rig is connected to the Bitcoin blockchain, which allows you to attempt to solve the algorithm. The equations are called SHA-256 algorithms, which will open the next block in the chain once it’s solved. This is where we get the term ‘blockchain.’
Basically, all you need to get started mining Bitcoin in Canada is a computer that has the ability to do so. That’s it. Of course, they’re not handing these rigs out for free. If you are just wanting to learn how to mine Bitcoin, you’re better off going with a cheap setup. You might spend a few hundred dollars on your computer.
However, if you’re serious about mining Bitcoin and earning rewards, legitimate miners pay tens of thousands of dollars. With these rigs, you’re more likely to unlock the next block and earn some Bitcoin.
One item worth noting once you get your rig set up is that you’re going to need to keep it cool. So, not only will you need to pay for the electricity to power your computer while it tries to solve the SHA-256 algorithm, but you will also have to keep it from overheating.
There are plenty of benefits to mining Bitcoin in Canada. One reason is that ASIC manufacturer ePIC Blockchain is located in Toronto. ASICs are computers designed specifically to mine cryptocurrencies. They’re some of the best you can get.
Unfortunately, you can only mine SiaCoin with ePIC Blockchain ASICs at this time. The company has announced it will start manufacturing Bitcoin miners soon. Once they do, you’ll be able to quickly get your hands on Bitcoin mining equipment without having to go out of the country.
There are also several provinces in Canada that encourage growth in the crypto industry. We briefly touched on Alberta, which has created many programs and policies that benefit mining Bitcoin.
Plus, if you do need to purchase something from outside of Canada, the country’s taxes on imports are much lower than you’ll find in other nations. For example, the US taxes ASICs at a 27.6% rate if they come from China. That’s a hefty fee to add on top of the already significant cost of an ASIC miner.
You don’t have to pay taxes on any rewards you receive from mining Bitcoin. However, there is a catch. If you sell your Bitcoin, then you’re required to report it to the Canadian government as capital gains, which means you’ll have to pay taxes on it.
Think of it the same way you would if you bought and sold stocks. As with any other investment type, you only pay taxes on it when you sell it for a profit. The same applies to Bitcoin.
Some people try to avoid paying taxes by moving their profits to their TFSA (Tax-Free Savings Account). However, mined Bitcoin does not qualify for TFSA.
At the time of writing, Canadian laws that regulate Bitcoin and paying taxes are fairly lax and uncomplicated. Just claim your profits as capital gains and pay the appropriate taxes. That’s all there is to it.
It is 100% legal to mine Bitcoin if you reside in Canada. Of course, as we discussed, mining Bitcoin is not as straightforward as many people think. There are additional costs – like mining rigs, electricity, and taxes – to consider.
If you’re interested in learning more about mining Bitcoin in Canada, we have a great how-to guide that will walk you through it.