Responding to unexpectedly high interest from cryptocurrency mining companies, the Quebec government is considering raising energy rates for crypto-businesses, a move which could put a chill on growth in the new tech sector.
Cryptocurrency mining requires access to cheap energy to power the massive computing facilities needed to produce their product: bitcoin, mostly, which miners receive for solving complex cryptography problems that, in turn, serve to verify transactions on the the currency’s blockchain.
With the increase in value for currencies like bitcoin, ethereum and litecoin, cryptomining has become a worldwide industry, with facilities opening up wherever power grids and, often, cooler climates prevail. Vancouver-based HIVE Blockchain, for instance, has mining facilities set up in Iceland and Sweden, while Toronto’s Hut 8 Mining Corp. operates a 42-megawatt mining centre in Drumheller, Alberta.
On the international level, China has been until recently a major player in the burgeoning field, using its cheap electricity to become an industry leader. But with the Chinese government cracking down on crypto-activity and discouraging local governments from taking on the risks of crypto-mining, many companies are looking towards Canada for suitable venues.
The province of Quebec had initially expressed interest in encouraging more cryptocurrency mining, reportedly planning on offering mining companies a low hydropower rate potentially available to businesses under Hydro-Quebec’s Industrial Revitalization Rate (said to be 3.30 cents per kilowatt hour in comparison to the residential rate of 5.82 cents per kilowatt hour).
But a flood of new interest from mining companies has Quebec representatives now rethinking their options. As reported by CTV News, Hydro-Quebec is considering raising rates for power-hungry mining facilities, as the provincial body has received interest from more than 100 companies.
“We’ve had such an important volume (of requests) that there are questions being asked on the tariff offered and the quantity of clients we’ll be able to plug in,” said Hydro-Quebec spokesperson Marc-Antoine Pouliot.
Pouliot says that some of the proposed projects are for facilities requiring up to 100 MW, which may be too much for even an energy-rich province like Quebec to handle. “One project like that isn’t a problem, but now we’re talking about hundreds,” said Pouliot.
Hydro-Quebec has not divulged the names of mining companies but, last month, Global News reported that China-based Bitmain Technologies, said to be the world’s largest bitcoin miner, has been in talks with Quebec power authorities, while David Vincent, director of business development for Hydro-Quebec has said that of the world’s top five largest blockchain players, “we have at least three or four” looking into Quebec as a potential destination.
Hydro-Quebec has expressed its interest in luring new economic activity from the tech sector, but it may be attempting to distinguish cryptominers from more established businesses looking to set up data centres.
“There’s definitely a gold rush feeling with some of them and they aren’t all well organized. We’re interested, but we are being cautious,” said Hydro-Quebec spokesperson Jonathan Coté to the Financial Post. “If we had to choose between an Amazon data centre and bitcoin we would definitely choose Amazon.”