One of the coolest things about crypto mining is that anyone can do it so long as they have the necessary equipment.
But just because you can do something doesn’t mean you should do something, right? This begs the question, is crypto mining legal in Canada?
The short answer is, yes, crypto mining is legal in Canada. However, you should note that even though mining cryptocurrencies can be rewarding, it can also get very expensive.
Still, so long as cryptocurrency is legal in Canada, you should be able to mine crypto without fear of government intervention or recourse.
Still, there are some things you should know before you run out the door and start buying a bunch of mining hardware.
Read on to find out what you need to know about legally mining crypto in Canada.
Is Crypto Mining Legal in Canada?
As we mentioned, it is completely legal to mine cryptocurrencies in Canada. It’s also legal to buy, sell, and trade crypto investments.
To this point, the Canadian government hasn’t made too much of a fuss over cryptocurrencies and it hasn’t created many laws or regulations dictating what users can or cannot do.
While countries like Iran, India, China, and others are banning crypto, countries like Canada are still open to the idea. As a result, many crypto miners see the opportunity provided by a country like Canada.
For example, when the Chinese government banned cryptocurrencies, we saw a major move from there to Canada.
Is it Safe to Mine Crypto?
From a legal and regulatory perspective, it is perfectly safe to mine crypto in Canada. You’re not going to get in trouble with the law or the government if you want to set up a rig and start mining your favourite crypto.
However, there are a few things to keep in mind before you get started.
For example, there are some places in Canada that are home to electric companies that aren’t fans of crypto mining.
These companies make it challenging to mine crypto and are notorious for banning those who do.
For example, a company called Hydro-Quebec placed a ban on miners who crossed a specific threshold for the amount of electricity used throughout the month.
On the other hand, there are also electric companies that have done their part to make things easier for crypto miners. Hut 8 is a company located in Alberta that does what it can to accommodate crypto mining.
If you’re serious about mining crypto in Canada, Alberta is one of the best provinces in the country for doing so.
For the most part, mining crypto in Canada is safe, even if you’re only doing it as a home hobby or side hustle.
Keep in mind that unless you’re investing a lot of money into a high-powered setup, you’re not going to see much return on your investment.
Remember to make a note of how much energy you’re using as you mine. More powerful rigs require more energy and while the government may not care how much you use, your electric company will keep a watchful eye on your consumption.
While you may not get banned, you’ll almost definitely get a large bill at the end of the month.
What You Need to Start Mining
Knowing that crypto mining is legal in Canada might lead you to ask how does one go about mining crypto? That’s a great question. But before we answer it, let’s take a moment and discuss what crypto mining is.
Simply put, crypto mining is solving a math equation. The process of mining a block on the blockchain requires massive amounts of computational power.
This is done through a computer that’s connected to the cryptocurrency’s blockchain, called a miner or rig.
The purpose of the rig is to solve the math equation, which is most often called SHA-256. This is the algorithm that will unlock the next block in the chain – hence the term blockchain.
That means that before you can start mining and solving these complex algorithms, you’ll have to purchase a computer capable of doing so.
The cost of a rig can range from a few hundred dollars to tens of thousands, so be sure mining crypto is something you really want to do before you get started. Of course, the more a rig costs, the more effective it’s likely to be.
However, keep in mind that you’re going to have to keep your computer cool as it attempts to solve the SHA-256 puzzle.
This is a 24-hour a day operation, which means you’ll need access to lots of energy – not only for computational power but for fans constantly running to keep your machine from overheating.
Are Crypto Mining Rewards Taxed?
The short answer here is no, crypto mining rewards are not taxed. You don’t have to pay taxes on your crypto unless you sell it.
Once you sell your crypto, the profit is earmarked as capital gains and taxed as such. It’s similar to how you’re taxed when purchasing and selling stocks.
Just like any other type of investment in Canada, you don’t have to pay taxes unless you sell the asset for a profit.
If you’re thinking well I’ll just add it to my Tax-Free Savings Account (TFSA), unfortunately, that’s not an option for mined cryptocurrencies.
For now, the laws surrounding cryptocurrencies and taxes aren’t very strict. Simply report any profits you earn from them, just like you would with any other income type.
However, don’t be surprised if these regulations become stronger in the future as interest in crypto increases.
Why Mine Crypto in Canada?
There are several reasons to consider mining crypto in Canada. For starters, ePIC Blockchain, a Toronto-based ASIC manufacturer, resides in Toronto.
At this time, the hardware only mines SiaCoin, but there are Bitcoin miners on the way. Once these begin production, Canadians will have quick access to mining equipment.
Canada also has many provinces that support industry innovation and growth. Alberta, for example, has established favorable programs and policies that show its commitment to the crypto mining industry.
Additionally, import taxes are significantly lower in Canada, which means it’s much cheaper to get the crypto mining hardware you need than it is in other parts of the world.
The United States, for example, has a 27.6% tax on ASICs that come in from China. That’s a sizable saving when compared to our neighbours to the south.
It’s perfectly legal to mine crypto in Canada. However, it’s important to remember that it’s not as simple, easy, or cheap as it sounds.
Purchasing a good mining setup could wind up in the tens of thousands of dollars. Plus, you’ll have to pay the electricity bill that comes along with it.
Canadians are free to mine as much as they want in certain areas, but keep in mind that it comes at a cost.
If you want to learn more about mining Crypto in Canada, check out our guide on how to mine Crypto in Canada.