Canada’s biggest electric utility Hydro-Quebec will temporarily halt processing requests from cryptocurrency miners due to “unprecedented” demand that has exceeded the company’s short and medium-term capacity.

In a press release dated June 7, the utility company noted that the directive to stop processing such requests came through a ministerial order. An “Order-in-Council” also instructed the provincial regulator, Régie de l’énergie, to address concerns hounding electricity sales to companies in the blockchain industry.

The council had five specific concerns: 1) categorization and specific rate setting for blockchain customers; 2) reserving a block of energy for these customers; 3) revenue maximization, 4) job creation; and 5) winter peak period issues.

To address the above concerns, Hydro-Quebec announced that:

“In coming days, Hydro-Québec will file an application with the Régie de l’Énergie proposing a selection process for blockchain industry projects in light of the concerns expressed by the Québec government in its Order-in-Council. The application will highlight the importance of rapidly moving forward so as not to miss the opportunities offered by this industry.”

Reuters, previously, reported Hydro-Quebec had asked the provincial regulator to limit the total power available for all crypto-miners to a single 500MW block. This is far below the 17,000MW that has so far been requested by Quebec-based crypto-miners, and highlights just how much demand has grown.

Considering that Hydro-Quebec’s total capacity is estimated at slightly above 40,000MW, this means that crypto-miners have requested to use over 40% of the utility company’s entire network capacity. Crypto-miners should not have been surprised by this latest announcement since this is not the first time their electricity requests have been temporarily stopped.

Not the First Time Mining Electricity Requests Have Been Halted

In March 2018, it was reported that the company had put a similar moratorium on such requests, with a spokesman from the company saying:

“At the moment, the volume of requests that we have received from the cryptomining scene is very large…”We’re talking about more than 10,000 megawatts.”

According to local news reports, the March moratorium was only lifted at the end of May and Hydro-Quebec would implement new rates and “forced load shedding” on crypto-miners. This means that, during times of higher capacity requirements, the amount allocated to these companies would be reduced accordingly.

Quebec flag waving against clean blue sky, close up, isolated with clipping path mask alpha channel transparency. Source: Shutterstock.com
Quebec flag waving against the clear blue sky, close up, isolated with clipping path mask alpha channel transparency. Source: Shutterstock.com

Quebec and Crypto Mining: A Tenuous Balancing Act

Electricity costs in Quebec are about 36% lower on average compared to the United States and about 49% lower compared to the other G7 countries. Even in Canada, Quebec has the lowest costs in the country. This is because almost 100% of the energy produced in Quebec is renewable and stable, being mostly from hydropower.

These cheap electricity rates were an obvious incentive for crypto-mining operations, which moved to Quebec in droves. This was encouraged by Hydro-Quebec, which saw these miners as a lucrative revenue stream. The company even offered these miners discounted rates, hoping to attract more of them to the region. However, as electricity demand from these miners began to rapidly increase, the government saw no choice but to intervene.

As the crypto-mining industry continues to grow, it will be interesting to see how Hydro-Quebec manages this balancing act. Quebec is also a hotspot for data centers; so, it would be interesting to see if the company raises rates for that customer demographic as well.

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