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Quebec Forced to Reject All New Mining Requests so the Rest of the Province Can Get Power

Ethereum Mining Rig

Hydro-Quebec, Canada’s leading electric utility provider, has announced plans to temporarily reject all future requests from cryptocurrency miners looking to set up operations in the province, Bloomberg reports. The company’s president of Distribution, Eric Filion, gave an official statement suggesting that the new policy is necessary to ensure the company’s ability to supply power to the rest of the province.

“The blockchain industry is a promising avenue for Hydro-Quebec. . . Guidelines are nevertheless required to ensure that the development of this industry maximizes spinoffs for Quebec without resulting in rate increases for our customers. We are actively participating in the Regie de l’energie’s [the province’s energy regulator] process so that these guidelines can be produced as quickly as possible,” said Filion.

The statement also made clear that the new policy is intended to be a pause for new applications, rather than a permanent stop, while the company creates guidelines to ensure approval for only the most promising mining operations.

Today’s story is the most recent news in a saga stretching back to 2016, at which time Quebec was making public bids to tech companies like Amazon and Facebook to relocate their data centers to the Canadian province. Their message was simple: Quebec provides cheap power, a cold climate (useful for reducing cooling costs) and a stable political environment.

The pitch worked, but not on the companies Quebec was hoping for. Instead it drew a group of younger entrepreneurs with even higher energy demands—cryptocurrency miners.

Historically, China has been the most popular location for cryptocurrency mining operations due to the country’s low energy costs. Over the last two years, however, the Chinese government has begun cracking down on mining operations, leading miners to seek greener pastures in other parts of the world.

A look inside one of the world's largest Bitcoin mining operations.

A look inside one of the world’s largest Bitcoin mining operations. – Al Jazeera

This is at least partly responsible for the inundation of mining operations in Quebec. Numerous stories have broken out over the last year about miners relocating to Quebec and the province’s subsequent attempts to keep up with their insatiable energy consumption.

“One project like that isn’t a problem, but now we’re talking about hundreds,” a spokesman for Hydro-Quebec said in February, around the same time that the company announced it was considering raising rates on mining operations.

Soon after, Quebec’s Minister of Energy and Natural Resources, Pierre Moreau, also commented publicly about the influx of mining operations, saying:

“If you want to come settle here, plug in your servers and do Bitcoin mining, we’re not really interested. . . There needs to be added value for our society; just having servers to do transaction mining and acquire new bitcoins, I don’t see the added value.”

Quebec’s pause on new mining applications indicates that the province is beginning to experience some of the same problems that drove China to crack down on cryptocurrency mining operations in the first place.

The news also highlights questions of sustainability that have pervaded the cryptocurrency space for years. Proof-of-work (PoW) mining algorithms like those used by Bitcoin and many other cryptocurrencies require extraordinary amounts of energy and are simply not feasible over the long term.

This has led some cryptocurrencies, most notably Ethereum, to begin transitioning toward alternative systems like proof-of-stake (PoS) or delegated proof-of-stake (DPoS) that use considerably less energy while still maintaining effective decentralization and security.

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