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In the electrical insulation design of a pancake coil type high temperature superconducting (HTS) transformer, knowledge of the dielectric behavior of both liquid nitrogen (LN2) and gaseous nitrogen (GN2) is very important. Also, the breakdown strength under a quench conditions is an important factor of the insulation engineering. Since spacers are used in the pancake coil type HTS transformer, the liquid nitrogen and the spacer must be considered together in the design of the insulation and cooling of this type transformer. This paper describes the results of an experimental study on the electrical breakdown phenomena and properties of liquid nitrogen with the electrode of the pancake coil made with Ag sheathed Bi-2223 HTS tape. When bubbles occur, the breakdown characteristics of LN2 in a simulated cooling channel are examined to understand the optimal dimensions of the cooling channel. Open and closed cooling channels were made to compare the breakdown voltage to each other. The breakdown voltage in the open cooling channel appeared higher than the breakdown voltage in the closed cooling channel. The open cooling channel type is recommended for higher stability of equipment. This research will be useful in the electrical design of pancake coil type HTS transformers that are cooled by LN2.