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Why Quebec is Rejecting New Hydropower Requests for Crypto Mining

Canada’s hydroelectric company is so overwhelmed with the energy demands of cryptocurrency mining operations it is temporarily turning new requests. Hydro Quebec says it may no longer meet the needs of other consumers if it did not put in place the new curbs.

Total energy requests will take up almost a quarter of the company’s capacity of 37,000 megawatts.


The unprecedented demand “exceeds Hydro-Québec’s short- and medium-term capacity,” the company says in a statement.

The pause will now allow authorities to craft new guidelines for granting new requests.

Cryptocurrency mining is the process of verifying transactions on a blockchain network. It involves running complex algorithms to verify the authenticity of new transactions. The process requires large amounts of computing power and therefore high energy demands. Miners are rewarded with tokens for verifying transactions and maintaining the network.

Bitcoin’s Energy Problem

A recent peer-reviewed study found that the energy demands from bitcoin mining will soon exceed the total energy consumption rates of whole countries such as Austria and Ireland.

“With the Bitcoin network processing just 200,000 transactions per day, this means that the average electricity consumed per transaction equals at least 300 kWh, and could exceed 900 kWh per transaction by the end of 2018,” the study by deVries says.

Solutions such as the Lightning Network which is faster and consumes less energy have been proposed.

Certain jurisdictions have banned the activity over the issue. Quebec is not taking an entirely grim look at the industry though.

It will even define a block of energy specifically for cryptocurrency mining in new proposals to the regulator Regie de l’energie . The government is hoping that the industry can generate extra jobs for the economy.

Hydro-Quebec is now looking to expedite the new regulations.

Maximize Spin-Offs

Guidelines are nevertheless required to ensure that the development of this industry maximizes spinoffs for Québec without resulting in rate increases for our customers,” Hydro-Quebec’s Eric Filion said.

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“The measures announced today represent a responsible, prudent and practical approach to welcome top businesses from the blockchain tech sector, to contribute to the economic development of other sectors and to create spinoffs throughout Québec, while ensuring energy supply for all Quebecers,” Pierre Moreau, Quebec’s minister for energy said.

Bitcoin mining is so energy intensive it is not economically viable in countries where energy is expensive. Miners in China and Russia have an advantage because of the relatively cheap energy costs. Quebec has some of the cheapest power rates in the world.

A study done by KPMG for Hydro-Quebec found that cryptocurrency mining “does not generate many jobs” unless associated with similar activities. Other studies have found that 5-25 jobs are generated by megawatt of electricity consumed.

Some economic spin-offs mentioned in the report include manufacture, distribution and repair of mining equipment and software development.

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