With a cool climate and endless supplies of renewable hydropower left over from a time when forestry, pulp and paper, and traditional mining drove the economy, Québec, Canada, has the potential to be a thriving bitcoin mining hub.
Québec’s energy agency Hydro-Québec told Bitcoin Magazine that it now provides 668 megawatts (MW) of power to bitcoin miners (which it classifies as “blockchain companies”) and is currently taking proposals for 300 MW more, which will make mining one of the biggest industries in Québec in terms of energy consumption.
Bitfarms, a Toronto- and Brossard-headquartered bitcoin mining company, accounts for a significant portion of this with its five farms in Cowansville (in a former Tupperware factory), Saint-Hyacinthe (in a former cocoa bag storage facility), Farnham (in a former carpet factory), Magog and Sherbrooke (in its newest facility, a former hockey stick factory).
In an announcement made on September 9, 2019, Bitfarms (listed on the TSX Venture Exchange) let its investors know that it has received new mining equipment from the Chinese company Innosilicon, including 4,100 new generation miners which will be installed in the company’s Sherbrooke computing center. Installation has started and, once the facility is fully operational, new mining hardware will add approximately 210 petahashes per second (PH/s) of bitcoin-focused computing power.
“We are tremendously proud of our operational growth this year,” Pierre-Luc Quimper, Bitfarms president and founder, said in the announcement. “In partnership with Hydro-Sherbrooke, Bitfarms has commenced operations at its fifth modern data centre, utilizing surplus hydroelectricity to power blockchain infrastructure facilitating the Bitcoin network.”
Blockstream Won’t Expand Bitcoin Mining in Québec
Blockstream, the bitcoin and blockchain company, made a big splash in mid-August 2019 when it announced its new mining superstores in Québec and Adel, Georgia.
Blockstream had negotiated competitive rates with Hydro-Québec but, shortly after, the independent Québec Energy Board, which regulates energy use, announced it was developing new guidelines for “blockchain” businesses.
“We have extended the deadline for submitting bids in the request for proposals to give time to the Régie de l’énergie [the local energy board] to render important decisions regarding blockchain in Québec, namely regarding the terms and conditions that will prevail for this new category of consumer,” Hydro-Québec’s Jonathan Côté told Bitcoin Magazine. “We are hoping to have a decision by the end of September and the request for proposals will end at the end of October.”
Blockstream’s CSO Samson Mow recently told Bitcoin Magazine that the company will keep its current Québec location running but will expand only into the U.S.
“It’s the political uncertainty,” Mow said, regarding Québec’s market. “If they’ve looked at how they’ve presented themselves to the public, the government of Québec would realize they haven’t exactly delivered a very cohesive message to companies interested in investing.”
A Lost Bitcoin Mining Opportunity for Québec?
Jonathan Hamel, a close observer of the Québec mining scene and founder of academiebitcoin.com, told Bitcoin Magazine that he feels any chance for Québec to become a thriving bitcoin hub is slipping away.
“Québec has gone down dramatically in terms of ‘attractiveness’ for bitcoin miners in the last 12 months,” he said. “The political crisis created by the former provincial government (defeated in October 2018) that forced Hydro-Québec to [turn] 180 degrees on its ‘blockchain industry’ offering gave a cold shower to any investors willing to develop the industry here … There are much better jurisdictions across Canada who are currently offering energy at a price similar if not lower and without the political risk.”
Hamel also noted that Québec’s culture has always supported an interventionist style of government, quite unlike the more entrepreneurial culture of a province like Alberta.
“There is a chronic aversion to private capital in Québec. The economy here is deeply political,” said Hamel.
Hamel added that Hydro-Québec is now subject to rulings and decisions from the Québec Energy Board with new requirements for mining firms to meet.
Meanwhile, Bitfarms is willing to work with the government on getting the mining industry regulated in Québec.
“We remain confident in our view that the province of Québec is a leader in supporting this vital and burgeoning industry,” said Quimper.
“The Energy Board of Québec, which is an independent tribunal, has an important role in establishing a framework for the emerging cryptocurrency mining industry within the province and the proceedings will likely continue for several months,” Bitfarms CEO Wes Fulford said. “Québec is politically very stable. The energy market in Québec is highly regulated, it can definitely be a complicated and lengthy process to outsiders, but our team has been doing business in Québec for more than a decade in the data-center sector and now in the blockchain sector.”
Jessie Willms is a planet earth based former government and political researcher and communications officer helping to document the FinTech revolution and its impact on traditional institutions and governments. You can follow Jessie on Twitter at @WILLMS_.