Cryptocurrency Miners Are Using So Much Energy That Quebec’s Government Had to Crack Down

June 8, 2018, 11:07 AM UTC

The government of Québec is blocking all new requests for hydroelectric power from cryptocurrency-mining operations, so energy company Hydro-Québec can keep supplying power to everyone else in the Canadian province.

The emergency move followed a warning from Hydro-Québec that the “unprecedented demand” from these operations, which use a lot of power in order to generate virtual currencies such as Bitcoin, “exceeds Hydro-Québec’s short- and medium-term capacity.”

During the pause, the provincial administration and energy firm will come up with a new framework for granting requests in a sustainable way.

“The blockchain industry is a promising avenue for Hydro-Québec,” said company president Éric Filion. “Guidelines are nevertheless required to ensure that the development of this industry maximizes spinoffs for Québec without resulting in rate increases for our customers.”

The new guidelines will define a new category of electricity consumers, just for cryptocurrency mining operations, with a block of energy reserved for these customers. The company and the provincial government will also look at how best to ensure that the sector creates as many jobs as possible.

“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,” said Québec energy minister Pierre Moreau.

Cryptocurrency mining is notoriously hungry on the energy front, to the extent that—in the current context of depressed token values—it may not even be economically viable for the miners. The activity can be very polluting as a result, though the environmental impact is of course mitigated by the use of renewable energy, such as hydroelectric power. Hydro power can also be relatively cheap, boosting that economic viability.

However, Québec is not the only place to worry about cryptocurrency mining chewing up too much of the available energy. Plattsburgh in upstate New York banned Bitcoin mining earlier this year, after a surge in hydro energy usage drove up residents’ electric bills.

And jobs? Hydro-Québec commissioned KPMG to look into the economic spinoffs of the cryptocurrency sector, and the results weren’t very promising. Last month the resulting report showed relatively low direct job creation, compared with other energy-intensive sectors. However, KPMG said there could be benefits if auxiliary activities take place in Québec, such as software development and the manufacture, assembly or repair of the powerful computers used in mining.