Quebec’s largest company in the crypto sector, Bitfarms, deplores the province’s lack of consideration for the industry and threatens to continue its expansion beyond its borders if it continues to be ignored in this way.
« We have been trying for months to have discussions with Hydro-Québec and the government without success. We want to triple the size of our operations by the end of the year and nothing is happening, » says Geoffrey Morphy, president of Bitfarms. That’s not what we want, but if we continue to be ignored like this, we’ll have no choice but to invest our millions elsewhere. »
Founded in Brossard in 2017, Bitfarms has already set up five encryption centers in the province. These are located in Farnham, Saint-Hyacinthe, Cowansville, Magog and Sherbrooke, where the technology company occupies, among other places, the former Sherwood hockey manufacturing plant.
The Toronto-based company, whose shares are now traded on the TSX Venture Exchange, specializes in Bitcoin mining, which involves solving – using powerful computer systems – complex cryptographic problems for the Bitcoin network.
Electricity bill of $23 million
The problem is that bitcoin mining is a particularly energy-intensive activity, which worries Hydro-Québec, which is looking after its electricity reserves. For example, Bitfarms alone consumes 69 megawatts (MW) of electricity, the equivalent of the average consumption needs of 25,000 single-family homes. Its last electricity bill was close to $23 million.
Still, the operation looks lucrative. For fiscal 2019, Bitfarms’ revenues exceeded US$32 million, making it the largest of the 100 or so companies in the sector in the province. In addition to its president, who is based in Toronto, Bitfarms has 90 employees, all located in Quebec.
But the company is ambitious and claims to be able to easily add about 20 workers to its services, if only Quebec would finally show the slightest interest in the tens of millions that the company says it is willing to invest here in the short term.
Its project: the construction of a sixth encryption centre in the province, the largest ever built. With an initial surface area of 100,000 sq. ft., the production unit would require, in addition to the building, investments of $50 to $100 million in equipment.
Quebec electricity in the U.S.?
To operate them, at least 50 MW would be required, in addition to the 69 MW already in use.
« We have never applied for a subsidy. All we want is to be able to quickly discuss the best location for such a centre in Québec. It’s an open invitation: Hydro, Pierre Fitzgibbon, whatever, we want to move forward. »
Geoffrey Morphy President of Bitfarms
The company has the wind in its sails. Since the beginning of the year, its share price has risen 73.6% on the stock market and it has managed to conclude, one after the other, two rounds of financing with U.S. investment companies totalling $40 million.
Cautionary in the face of such haste, Hydro-Québec points out that the sector is currently under a moratorium and that no decision can be made until the Régie de l’énergie du Québec has ruled on the matter.
We are subject to the Régie’s decisions, » says its spokesperson, Jonathan Côté. In the meantime, there are no plans to grant additional capacity to this industry. Those are the rules; we have to follow them. »
A position that frustrates Bitfarms, especially since it claims to be courted by several other jurisdictions. In October, it signed a letter of intent in Latin America for the use of 200 MW of electricity at an average price of US$0.02 per kilowatt hour, half the Hydro rate.
It also says it is being welcomed « with open arms » by three other Canadian provinces and at least as many U.S. states.
« I’ve just had discussions with a governor. The interest is great. Sometimes I wonder if we’ll end up in one of Quebec’s neighbouring states, which, unlike Quebec, will agree to sell us electricity directly from Hydro-Québec. This is nonsense. »
Impending decision by the Régie de l’énergie
After two years of work, a decision from the Régie de l’énergie du Québec is expected soon in the litigious case of the cryptomony industry.
We would all have hoped for a quicker decision, » admits Jonathan Côté, Hydro-Québec spokesperson. Now we’re hoping for a decision by spring, maybe sooner. »
Between 2017 and 2018, Hydro-Québec was overwhelmed by the electricity demands of crypt miners around the world. The company had received 300 requests for a total of 18,000 megawatts (MW).
In July 2018, in a panic, after granting 400 MW, Québec imposed a moratorium and asked the Régie to define the framework and conditions of service for this sector, known for its strong fluctuations and uncertain sustainability.
Today, there are just under 100 companies in Québec in this sector, with twice as much available capacity as the growing data centre sector (200 MW).