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Quebec Halts Crypto Mining Approvals As New Rules In Progress

Quebec has issued a moratorium on new cryptocurrency mining operations in a bid to give officials time to develop new restrictions and potentially increase energy costs, Reuters reported Thursday.

The Canadian province long known for its cheap hydroelectric power has formally stopped approving new projects in order to create new rules around which mining firms will be allowed to set up shop in the region, according to the news agency.

Further, Hydro Quebec, the state-owned power producer, hopes to limit the power that can be available for miners to 500 megawatts in total, or just “a fraction of the 17,000 megawatts” that miners had requested so far, according to the report.

Hydro Quebec has also reportedly asked Quebec’s energy board to create new rates so as to “help maximize the energy producer’s revenue.”

Yet this is not the first time Quebec has halted approvals for new cryptocurrency mining firms. As previously reported, Hydro Quebec briefly stopped accepting new clients from the space in March, citing the large amount of energy demanded by miners.

At the time, the firm produced a document which stated it would be unable to meet demand if every mining project that applied for space was approved.

With new restriction rules, as Reuters reported, Hydro Quebec would be able to choose “the best among the companies” vying to develop facilities in the region.

This will in turn help the province grow its economy without resulting in higher costs for local residents, said Hydro-Quebec’s distribution president Eric Filion in a statement.

Hydro Quebec image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Quebec Halts Crypto Mining Approvals Pending New Restrictions

Quebec has issued a moratorium on new cryptocurrency mining operations in a bid to give officials time to develop new restrictions and potentially increase energy costs, Reuters reported Thursday.

The Canadian province long known for its cheap hydroelectric power has formally stopped approving new projects in order to create new rules around which mining firms will be allowed to set up shop in the region, according to the news agency.

Further, Hydro Quebec, the state-owned power producer, hopes to limit the power that can be available for miners to 500 megawatts in total, or just “a fraction of the 17,000 megawatts” that miners have requested so far.

Hydro Quebec has also reportedly asked Quebec’s energy board to create new rates so as to “help maximize the energy producer’s revenue.”

This is not the first time Quebec has halted approvals for new cryptocurrency mining firms. As previously reported, Hydro Quebec briefly stopped accepting new clients from the space in March, citing the large amount of energy demanded by miners.

At the time, the firm produced a document stating it would be unable to meet demand if every mining project that applied for space was approved.

With new restriction rules, as Reuters reported, Hydro Quebec would be able to choose “the best among the companies” vying to develop facilities in the region.

This will in turn help the province grow its economy without resulting in higher costs for local residents, said Hydro-Quebec’s distribution president, Eric Filion, in a statement.

Hydro Quebec image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Quebec Pushes Hydropower Utility to Halt New Bitcoin Mines

The Canadian province of Quebec has temporarily put a halt to the development of new cryptocurrency mining operations.

The region – known for its cheap hydropower – has been an attractive destination for cryptocurrency miners looking to expand their businesses. Yet on Friday, Canadian newspaper Les Affaires reported that operators tied to utility firm Hydro-Quebec are turning down new clients, in part due to the demands placed on the hydroelectric dam by existing operations.

Quebec’s Minister of Energy and Natural Resources, Pierre Moreau, said cryptocurrency mines require a lot of energy, but only generate a small number of jobs when compared to other factories, such as those which refine aluminum.

Further, he added, there is a possibility that the region would be unable to meet the energy demands crypto miners create, saying:

“The objective of government is to insure to all Quebecois that during winter, Hydro-Quebec doesn’t say, ‘well, excuse me, I cannot provide [energy] because we’re in the middle of mining cryptocurrency.'”

Indeed, a Hydro-Quebec document seemed to agree, pointing out that it would not be possible to supply sufficient power for every project that had applied to set up facilities, according to Les Affaires.

The plant had received applications for “projects representing many thousands of megawatts” in the last few months, according to the news service.

Officials are now working on new guidelines for cryptocurrency mining facilities. Once these guidelines are complete, authorities will begin considering applications again.

Editor’s note: Some statements in this article were translated from French.

13 Valves Dam image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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'Hundreds' of Crypto Miners Said to Be Descending on Quebec

Canadian electric utility Hydro-Quebec may raise energy rates for crypto businesses due to an influx of requests from miners hoping to take advantage of its cheap rates.

More than 100 crypto mining companies have approached Hydro-Quebec, spokesman Marc-Antoine Pouliot told CTV News Montreal, and a few have already settled in the province. Notably, Pouliot said some farms would consume more than 20x the power required for Montreal’s sports and entertainment complex, The Bell Centre.

“One project like that isn’t a problem, but now we’re talking hundreds,” Pouliot was quoted as saying.

As reported by CoinDesk last month, Hydro-Quebec initially sought to attract large tech companies to the province with its low rates, but the cheap energy and cold weather – ideal for keeping mining machines cool – attracted mining companies as well.

Hydro-Quebec has a surplus of energy, which makes miners “interesting clients,” according to Pouliot.

However, the demand has caused the company to consider an industry-specific rate change – which in the past has only been realized in the form of discounts – to protect its surplus.

The news comes at a time when some mining hotspots are considering larger measures to manage the farms’ energy consumption.

Earlier this week, an Icelandic lawmaker proposed a tax on bitcoin mining companies, citing their lack of a contribution to national tax revenue. The country has extensive geothermal energy resources, and like Quebec, offers a cold climate that mitigates the heat output of mining machines.

Hydroelectricity power station via Shutterstock 

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Quebec Lures Cryptocurrency Miners as China Sours on Industry

Quebec was fishing for tech giants but caught bitcoin miners.

At least that’s how David Vincent, business development director at electric utility Hydro Quebec, describes the results of a campaign launched in 2016 to lure the likes of Facebook, Amazon and Microsoft to build their data centers in the Canadian province.

The sales pitch was simple: the province offers plentiful, cheap and renewable electricity, along with cold weather and a politically stable environment.

And while Hydro Quebec has gotten plenty of bites from traditional data center operators, the company also quickly discovered those same traits are equally attractive for cryptocurrency mining operations.

Nonexistent just six months ago, interest in Quebec from commercial-scale bitcoin miners has skyrocketed, Vincent said, amid the surge in cryptocurrency prices and political uncertainty in other jurisdictions.

For Hydro Quebec, 35 cryptocurrency mining organizations are asking the company for information regarding connecting to the power grid there. Those companies now account 70 percent of the total wattage capacity in Hydro Quebec’s development pipeline.

In an interview with CoinDesk, Vincent said:

“I have so much demand right now there’s no need for marketing. Pretty much every day I have a new one.”

And sentiments from others suggest what Hydro Quebec is seeing now is just the tip of the iceberg.

“Based on what I’ve seen in equipment purchase, real estate and power deals, things are exploding in Quebec,” said Austin Hill, the former CEO of Blockstream, who is now investing in and backing some of the mining projects looking to Quebec.

Cheap and abundant

Cryptocurrency mining – the energy-intensive process by which new transactions are added to a blockchain – generally requires specialized hardware (either ASICs or GPUs) to solve complex mathematical puzzles. Because of the vast amount of computing power that’s used, mining rigs generate a significant amount of heat, which is why mining operations look for colder environments to set up shop.

But it’s not only the cold weather that’s a draw for Quebec. The government’s aggressive effort, during the post World War II era, to build dams in its northern regions has proven enticing enough to pull mining operators away from existing bases that already have weather on their side.

Because of that work, Quebec has become one of the largest hydroelectric power producers in the world. Hydro Electric, with 37,000 megawatts of installed electricity capacity, routinely produces at surplus levels and is thus able to offer some of the lowest rates in North America to its commercial customers.

For data centers, Hydro Quebec charges as low 2.48 cents (in USD) per kilowatt hour, and 3.94 cents per kilowatt-hour for bitcoin miners (the slight increase for the latter due to mining operations’ smaller job creation and economic development footprint), Vincent said. These rates are anywhere from 50 percent to three times lower than in comparable parts of North America, according to data compiled by Hydro Quebec.

Historical consistency in pricing over time, and the assurance that the rates are not simply teasers that will jump overnight, are a key part of the value proposition for cryptocurrency mining operations, Vincent said. He added:

“We always succeed at staying below inflation. It’s been like that since 1963 and it’s not going to change.”

And while some have argued that cryptocurrency mining is environmentally degrading, there’s a growing trend by these mining operations toward finding competitive advantage via greater energy efficiency and resource optimization.

“In some hotter environments, the current ASIC equipment ends up having a very short shelf life of around six to nine months because it gets so hot, and the cost of cooling it isn’t worth the cost of the equipment,” Hill, who heads the Montreal-based Brudder Ventures, said, adding:

“It’s just easier to run it super hot, throw it away and buy a new one. It’s hugely wasteful.”

And moving to cooler climates, like Quebec, could help.

Political stability

Another driver behind Quebec’s accidental emergence as a cryptocurrency mining hub is that miners are increasingly looking for stable political environments where they can deploy their capital investments and plan their business efforts four to five years in advance with a higher degree of confidence.

While several of Hydro Quebec’s interested parties are based in North America, a significant number of mining organizations hail from countries, notably China, where the landscape for cryptocurrency mining, and cryptocurrencies in general, has become cloudier.

In China, for instance, rumors have been surfacing that the government plans on withdrawing preferential benefits such as cheap electricity and tax deductions to bitcoin mining operations. Plus, the People’s Bank of China has been one of the more aggressive regulators in the world when it comes to cryptocurrency, most recently issuing a ban on initial coin offerings and moving to shut down bitcoin exchanges.

Notably, Vincent said mining interest in Quebec began to tick upward significantly last fall after these moves by China.

He told CoinDesk:

“They don’t say it like that, but the fact that the rush of the demand came at pretty much the same time they were having problems in their previous jurisdiction, we could think there was a correlation.”

These concerns, along with a steady flow of reports about mining equipment seizures, kidnappings and game-playing by corrupt public officials in places like Venezuela, could make setting up shop in places where these risks are minimal more important than ever for mining operators.

A good problem

While Hydro Quebec is still, admittedly, trying to fully grasp this new class of customers, it’s been more than willing to roll out the welcome mat for them because of the enormity of the requests, not to mention the 24/7 nature of their operations.

To show mining operation’s scale, Vincent compared them to Hydro Quebec’s other customers.

Its smallest commercial customers, such as the Montreal Canadiens’ hockey arena, require five megawatts of electricity and a typical data center requires 30 to 60 megawatts. By contrast, “the top-three to top-five miners in world, most of them are talking to us, and the demand that they have right now is around 200 to 300 megawatts,” he said. “It’s huge.”

But with an industry as volatile as cryptocurrency, nothing is fully set in stone, and as a risk-averse, publicly owned utility, Hydro Quebec is minimizing its exposure by requiring miners to foot the upfront cost of the power connection and arrange a line of credit from a third party large enough to offset any losses in the event of something dire.

“The question for us is: is this a trend that will continue to stay at least as strong as it is right now?” Vincent said.

But for now, the biggest problem facing Hydro Quebec is finding enough buildings and locations that are suitable to be used as mining farms, as well as hiring more people who can help meet all of the requests from these types of potential clients, as quickly as they are coming in.

“[The miners] have this impression that they’re losing money every day, so they’re asking for big buildings with big interconnections and they want it tomorrow,” Vincent said, concluding:

“We have the capacity, but we’re not used to having so much big demand like this. It’s a good problem to have.”

Quebec flag image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.