The Future Of Bitcoin Mining In Québec Could Rest On Monday’s Parliamentary Elections

A technician monitors cryptocurrency mining rigs at a Bitfarms facility in Saint-Hyacinthe, Quebec, Canada, on Thursday, July 26, 2018. Photographer: James MacDonald/Bloomberg

Bitcoin could be significantly impacted by an election for perhaps the first time ever today as Québec voters go to the polls in the French-Canadian province’s parliamentary elections.

The general elections are the province’s first since tensions arose earlier this year over how electricity should best be allocated for Bitcoin mining.

Bombarded with demand in early 2018 by miners from China and elsewhere, the provincial government – headed by the Parti Liberal du Québec – quickly applied heavy brakes to the nascent mining industry by ordering Hydro-Québec, the state-owned electric utility, to restrict the sale of power and charge higher tariffs to customers in the blockchain industry.  

The government pointed to grid capacity and economic development concerns to publicly justify its actions, but that explanation didn’t resonate well among many in the local industry who saw the move as a political crackdown that has chased away investment and innovation.

“These measures immediately damaged numerous mining operations in Quebec and deterred investors who went elsewhere,” François Remy, a former columnist at Les Affaires, a Montreal business newspaper, told Forbes. “The crypto community is really not happy about that.”

“The Québec Bitcoin eldorado is dead,” Francis Pouliot, a voice in the Montreal cryptocurrency scene, tweeted in June.

But the incumbent Liberal government is at risk of being ousted in today’s elections by Coalition Avenir Québec, an upstart center-right, pro-business party that is focused on luring private sector jobs and investment to the province.

The CAQ has been the frontrunners for most of the past year and holds a small advantage in preliminary polling going into today’s elections.

While neither the Liberals, CAQ nor the separatist Parti Québécois, which is expected to place third, have taken an official stance on Bitcoin mining, many locals regard CAQ’s platform as being, on the whole, friendlier to the blockchain industry.

Thus, a CAQ victory could provide a fresh boost for cryptocurrency mining in the province should the new government loosen or undo the electricity sale restrictions placed on Hydro-Québec.

“The (Liberal) government is about to lose the elections, and the other political parties, like Parti Québécois and CAQ seem more opened to blockchain,” said Remy, adding:

“They want to attract these companies, to support them and use cheap electricity and cold climate as a competitive advantage for the Québec economy.”

Wild Ride

Québec became a magnetic attraction for cryptocurrency miners in late 2017 and early 2018 as the outlook in places like China became hazier.

The province’s surplus of cheap hydroelectricity, cold weather and political stability, combined with its aggressive efforts to entice large electricity consumers, such as data centers, to invest locally made it an appealing destination for those looking to set up commercial Bitcoin mining operations.

Hydro-Québec was soon overwhelmed by demand from prospective miners. “The phone has been ringing off the hook,” CEO Eric Martel told Bloomberg in February. Reportedly receiving dozens of requests per day, the utility began signalling to potential customers that it would not be able to fulfill all of the connection requests.

Coupled with the downturn in crypto markets, the question of how to address Bitcoin mining reached the highest levels of the provincial government in March, when Premier Philippe Couillard articulated that he viewed mining in and of itself as a non-value-added activity:

“If you want to come settle here, plug in your servers and do Bitcoin mining, we’re not really interested.”

In May, an economic impact study commissioned by Hydro-Québec found that the amount of jobs created per megawatt by crypto miners is significantly less than for other types of large electricity customers, such as data centers.

Nevertheless, post-industrial towns like Thetford Mines, where the last asbestos mines permanently closed in 2012, see Bitcoin mining as a potential onramp to the new economy and as a way of re-purposing old traditional mining infrastructure.  

“We have 15 football fields of available buildings. We’re really interested for (cryptocurrency) mining companies to get in touch with us,” said Vicky Lachance of the Thetford Region Economic Development Corporation, who noted that she’s been in conversations with upwards of a dozen interested parties. 

The Québec government moved to throttle the new industry altogether on June 7, when Energy Minister Pierre Moreau declared a moratorium on all new mining projects and ordered the matter to be referred to the Régie de l’énergie, an independent…

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