Canadian Quebec tried to attract tech giants, but instead was interested in miners of bitcoin. At least that’s what David Vincent (David Vincent), commercial Director at energy company Hydro Quebec, describes the results of a campaign launched in 2016 to attract tech giants — Facebook, Amazon and Microsoft — to create their data centers in the canadian province.
The commercial offer was simple: the province offers abundant, cheap and renewable electricity, as well as cold weather and a politically stable environment. Although Hydro Quebec has earned a lot of traditional data center operators, the company quickly discovered that their offer is relevant to those engaged in bitcoin mining.
Missing six months ago, as such the interest in the Quebec major mining companies have risen sharply. The reason for that was sharp rise in the price of crypto-currencies and political uncertainty in the regions where most of the miners in the first place, China. In the case of Hydro Quebec 35 mining centers of cryptocurrency has asked the company for more information about connecting to the grid. Vincent says:
«Demand is now so great that there is no need in marketing. Almost every day I find a new potential client.»
The mood in the industry say that this increased interest in Quebec is just the tip of the iceberg.
«Based on what I saw in the sale of equipment, real estate and energy, many sectors of the economy intensified in Quebec,» said Austin hill (Austin-Hill), former CEO of Blockstream, who now invests in and supports selected projects in the field of mining in Quebec
Cheap and abundant
Mining cryptocurrency is energy intensive process by which new transactions are added to the blockchain, typically requires specialized hardware (ASIC or GPU) to solve complex mathematical problems. Because of the huge amount of computing power, the equipment generates a significant amount of heat, so mining companies are looking for some of the coldest climate for the creation of data centers.
But not only the cold weather leads to these companies in Quebec. After the Second world war the canadian government started to build dams in the Northern regions of the country. Through these efforts, Quebec became one of the largest producers of hydropower in the world, regularly producing energy in excess. This allowed the province to offer one of the lowest electricity rates in North America for its commercial customers.
For data centers Hydro Quebec provides electricity at 2.48 cents (in US dollars) per kilowatt-hour and 3.94 cents per kilowatt-hour for mining companies, said Vincent. According to data collected by Hydro Quebec, these figures are 3 to 50 times lower than the average for North America.
Vincent said that the consistency of pricing for a long period and the confidence that such rate is not just an attractive proposition, which may in the future increase dramatically, are a key part of a commercial proposal for mining companies. He added:
«We have always succeeded to keep pace with inflation. So it was with 1963, and this will not change».
The relocation of mining companies in québec can also have to say on reducing the unnecessary consumption of resources.
«In hotter conditions the current equipment stop working in 6-9 months, because it is much too hot, and its cooling above the cost of the new equipment,» says hill, who heads Montreal-based Brudder Ventures. «It is easier to overheat the equipment to throw away and buy new. And this is very wasteful from the point of view of resource consumption».
However, the move operations in colder regions such as Quebec, will be able to change this situation.
Another attractive feature of Quebec was the political stability in the region, which eager miners wishing to plan their work for the next 4-5 years without fear that a sudden policy change.
While several interested companies, who applied to Hydro Quebec is based in North America, a significant number of mining organizations hail from countries such as China, where the prospects of development and the existence of cryptocurrencies and mining become
increasingly vague with each passing day.
The people’s Bank of China in recent years has been one of the most aggressive regulators in the world when it comes to cryptocurrency. Last year, upon his initiative, the country was banned ICO, and the work of the cryptocurrency exchanges have been suspended indefinitely. Vincent said that the interest in mining in Quebec began to rise noticeably in the autumn of last year, following these steps from China.
These problems, and also persistent reports of seizures of mining equipment, abduction and games of corrupt public officials in regions such as Venezuela, can cause the construction of the farms where the risks of such events are minimal.
To show the scope of work of mining companies, Vincent has compared them with other customers of Hydro Quebec. Among the most small customers of the company — hockey arena of the Montreal Canadiens, which requires 5 megawatts of electricity, and for a typical data center requires from 30 to 60 megawatts. In this case, «the three largest farms in the world that appealed to us requires from 200 to 300 MW,» he said.
Due to the high volatility of the cryptocurrency industry, it is very difficult for something to say. That is why Hydro Quebec wants to minimize their risks by requiring miners to pay the cost of the initial investment on network connectivity, as well as arrange a loan from a third party that is large enough to compensate for any losses in the event of unforeseen circumstance.
«The question for us is: will this trend remain at least as strong as it is now?» — Vincent said.
At the moment the biggest challenge facing Hydro Quebec, is finding a sufficient number of buildings and places, which are suitable for using as mining farms, as well as recruiting more people who can help to meet all the requests of potential customers.