The Quebec government’s recent actions to disconnect cryptocurrency mining from the region has drawn criticism from Francois Remy, head of the digital desk at Les Affaires, a Quebec newspaper, in a recent blog. Quebec Premier Philippe Couillard has said the bitcoin miners planning to move…
The Quebec government’s recent actions to disconnect cryptocurrency mining from the region has drawn criticism from Francois Remy, head of the digital desk at Les Affaires, a Quebec newspaper, in a recent blog.
Quebec Premier Philippe Couillard has said the bitcoin miners planning to move to the region will not get cheap electricity from the government-owned utility Hydro-Quebec, as the utility may not have enough power to meet the demand. The utility has received an order to await instructions from the government.
“In recent months, we have received projects representing several thousand megawatts,” said a recent follow-up document sent by Hydro-Québec to some blockchain contractors.
Hydro-Quebec has advised some blockchain contractors it will not be able to supply them with electricity. The utility noted it is developing guidelines for supplying projects, taking into account the needs of other customers and limiting rate increases to the level of inflation.
Projects have requested amounts of electricity that are 5,000% above that of the average home consumption, in some cases exceeding that of aluminum smelters, Remy noted.
Pierre Moreau, the Quebec Minister of Energy, stated that blockchain projects request high amounts of electricity without creating many jobs – sometimes two or three jobs – whereas aluminum smelters create hundreds of jobs.
Moreau said the government wants to assure residents that it will not tell them they cannot provide electricity during peak winter energy use periods because of cryptocurrency mining.
The new position diverges from the utility’s previous efforts to attract companies using large amounts of electricity, such as bitcoin miners, Remy observed. The utility’s goal was to double revenue to nearly $30 billion by 2030 based on strategies dedicated to cryptocurrencies and blockchain technology.
The utility’s initial strategy was effective, considering the arrival of American cloud technology giants such as Google, Amazon and Microsoft, Remy noted. For the fifth consecutive year, the utility will pay a dividend exceeding $2 billion to shareholders, according to its CEO, Eric Martel.
Quebec has succumbed to the fraudulent, purely speculative and ecologically irresponsible impression of digital currencies portrayed by the general media and traditional economists, Remy observed.
The founder of Academie Bitcoin, a Montreal bitcoin consultancy, is not surprised by a counterproductive political directive concerning cryptocurrencies, given the government’s hostility to technological change, Remy noted.
This has been demonstrated by its attempt to ban Uber and to tax web giants.
Regulatory moves in the European Union appear to be inspiring these moves, Remy noted.
Jonathan Hamel, a Quebec entrepreneur and tech industry advocate, said the Couillard government has undermined investment projects in Quebec, and that the companies have contingency plans to establish operations elsewhere, particularly in Alberta.
Hamel said the players are extremely mobile, and many gas and oil producers are ready to host mining fueled by fossil resources that are hard to export elsewhere than in the United States.
Hamel called the Couillard government’s actions a “campaign of fear” that contradicts what previous governments have sought to achieve for 20 years — technological investments that will diversify the economy that depends on natural resources.
The Couillard government prevents investment of private capital in closed factories, said Hamel, who claims the government’s opposition is more ideological than factual. He said bitcoin mining presents an incentive to use clean, renewable energy.
Bitfarms, which operates bitcoin farms, hopes the Couillard government considers the economic ramifications in the creation of any tariffs.
Bitfarms currently employs 80 people and plans to add another 300 in 2018 on a full-time basis, depending on available electricity if tariffs do not rise, according to the company’s public relations director, Bahador Zabihiyan.
Bitfarms data centers create three jobs per MW. Positions include engineers, programmers, electricians and analysts, with an average salary of $55,163, with benefits.
In its agreement with Hydro-Sherbrooke and Hydro-Magog, Bitfarms agreed to use only surplus electricity and to unplug the machines if necessary during the high consumption winter period.
The crypto mining energy consumption figures released by Hydro-Quebec, from 3,000 to 10,000 MW, are alarmist and hypothetical, and would make it difficult for a miner to be profitable, said Zabihiyan, adding that it is a shame to use such numbers in the negotiations.
Auctioning energy blocks to help players with a short-term strategy would be a worst-case scenario for Hydro-Quebec since it would help players with a short-term strategy, Zabihiyan observed. A company like Bitfarms wants to invest for a longer term and would not be able to outbid players with a short-term strategy.
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Last modified: January 24, 2020 11:12 PM UTC