Could Quebec become the next crypto mining hub?
Quebec is gradually turning into the new crypto mining hub thanks to its cool weather and cheap hydroelectric power provision.
Mining has always been a major economic activity in Canada with such metals as copper, zinc and even gold having contributed to its growth. But the country has recently started attracting a different crop of miners from the digital currency space.
Power distribution in Quebec is carried out by Hydro Quebec, a state owned initiative that has its base in Montreal. It currently ranks as the fourth biggest hydroelectric power producer globally. The setting is ideal for crypto miners due to the low temperatures, an abundance of cheap and renewable electric energy and political stability.
Miners from hotspots like China are particularly enthralled at the opportunity following reports that the local government could extend its ban to mining operations.
A welcome deviation
According to the Hydro Quebec business development director, this was not the original intention of the project. He explains that the 2016 campaign was aimed to lure tech giants like Microsoft, Amazon and Facebook to set up data centres in the city.
The lure took effect with quite a number of big tech companies starting operations in the province, but the fact that the same features also appeal to crypto miners came as an afterthought. At the moment, there are almost 40 different mining firms talking to Hydro Quebec about the possibility of setting up operations on their grid.
The nature of cryptocurrency mining requires the use of very expensive equipment using dedicated hardware to solve advanced mathematical puzzles. They take up a massive amount of power and generate a lot of heat energy in the process.
This intense heat causes equipment to break down pretty fast. But according to seasoned miners, the cost of electric cooling would not be justified as it would exceed equipment value. So the trend is to use the machines and dispose of them when they break down after about six months.
This is obviously extremely costly and explains why areas with cold weather are a favourite for mining operations. Cheap electricity is an added bonus, reducing companies’ overheads and increasing profit margins.
A permanent allure
The pricing is highly attractive with data centres paying as little as $2.48 per KWh and $3.94 for mining firms. The notable difference is due to the fact that miners do not add as much to the local economy and create few job opportunities if any.
This makes a difference of almost 50% for miners from North American regions making the relocation worthwhile.
It is highly unlikely that the appealing current rates are simply teasers to get more consumers into the region. Vincent says that their pricing has been below inflation since 1963 and that it will not change due to heightened interest.
The effect is overall growth in Quebec with equipment suppliers and realtors being the top beneficiaries of the sudden boom. At the moment, the biggest challenge for Quebec is to find enough suitable locations to host mining operations.