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Crypto Winter Survivor: Inside Nvidia’s Difficult Relationship With Mining

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On Feb. 14, California-headquartered gaming and computer hardware manufacturer Nvidiareported full-year revenue gains in 2018, despite being one of the companies worst hit by the cryptocurrency market dip and subsequent lack of demand for mining components.

The firm’s main products include graphics processing units (GPU), among others, which became widely purchased by miners during the crypto boom of 2017 — as a result, the firm’s revenue started to correlate with the crypto market condition (at least to some extent), which resulted in a few shake-ups.

Company profile / NVIDIA

2017: Nvidia enjoys the crypto boom, becomes substantial part of the market

In 2017, its primary GPU product line, labeled “GeForce” — as well as its direct competition, Advanced Micro Devices’ (AMD) “Radeon” units — began surging in price as the crypto frenzy unfolded and Bitcoin (BTC), along with altcoins, gained mainstream recognition. That year, according to Jon Peddie Research, a market research firm for the computer graphics industry, miners purchased around 3 million devices for more than $700 million. As a result, Nvidia inadvertently became one of the market’s most significant players.

Graphics Cards Market Shares

The ever-increasing demand for mining equipment lead to higher prices: As Cointelegraph previously reported, the cost of flagship chips rose by 25 percent, with Nvidia’s GeForce 1080 being sold for more than $1,000 during the market peak, while it normally retailed for $550. According to media reports, Nvidia even started limiting its online sales to avoid excessive resell, allowing customer to buy no more than two items per person.

The company’s seniors greeted the sudden increase in sales caused by the rapid growth of an emerging market. In August 2017, while talking to MarketWatch, Nvidia CEO Jensen Huang appeared notably bullish about the crypto industry:

“Crypto is here to stay, and the market will grow to be quite large. […] It’s not likely to go away any time soon. There will be more currencies to come, they will come from different nations. […] We stay very close to the market, and understand the dynamics very well.”

In May 2018, Nvidia shared information about its revenue from chip sales to the crypto mining market for the first time. Specifically, the manufacturer reported earning as much as $289 million from processor sales to miners. Essentially, Nvidia was growing along with the market: The firm’s first-quarter crypto sales that year amounted to over 9 percent of overall revenue for the company, which stood at $3.2 billion.
“Crypto miners bought a lot of our GPUs in the quarter and it drove prices up,” the company’s CEO reportedly explained on the conference call, adding, however, that high prices prevented other consumers, such as gamers, from buying into the newest GeForce graphics card series.

First half of 2018: Crypto market plunges, Nvidia GPUs decline in price

However, by that time, Bitcoin had long entered its notorious nosedive — in January alone, the cryptocurrency lost half of its value from the $20,000 landmark high — and Huang wasn’t as optimistic about the market anymore. The sales to the crypto market would likely decrease by two-thirds in Q2 2018, the company forecasted.
“In the beginning of the year, we thought and projected crypto would be a larger contribution through the rest of the year, but at this time we consider it to be immaterial for the second half,” Huang told MarketWatch at the time.
Indeed, as Cointelegraph reported, revenue for miners had decreased, as the crypto market underwent a correction following record highs in December 2017. Hash rates were still growing, however, indicating that the mining pool continued to expand globally.
Hash Rate and Miners' Return in 2018

In August 2018, the hardware developer declared that crypto mining sales in Q2 were even lower than expected. Nvidia began to dismiss the once profitable market, arguing that it does not expect to make significant mining-related sales for the rest of the year. Colette Kress, the company’s chief financial officer, stated:

“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million. Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”

Nvidia also forecasted its third quarter revenue between $3.19 billion and $3.32 billion, lower than the figure predicted by analysts of $3.34 billion. As a result, the manufacturer’s shares declined more than 5 percent.
In July 2018, media started to report that the price of specialized GPUs has been declining along with sinking prices in digital currency markets. Thus, according to Computerworld, in April 2018, AMD’s OEM 4GB RX 580 six-pack was sold out at the price of $3,600, while in July, it was available for just $2,500. Respectively, an Nvidia GeForce GTX 1080 Founders Edition, 8GB GDDR5X PCI Express 3.0 Graphics Card was sold out at a price tag of $1,050 in April, but could be purchased for $709 around July.
Video Cards Prices Over Time

Second half of 2018: ASIC’s takeover, Nvidia experiences “crypto hangover”

Meanwhile, application specific integrated circuits (ASICs), a special type of computer chip that is designed solely for cryptocurrency mining, had been developed for a number of cryptocurrencies, outperforming GPUs. The largest company to ride the ASIC wave was the China-based Bitmain company, which was eventually also severely hit by the bear market. Nevertheless, the outfit began selling devices that mined non-ASIC-resistant cryptocurrencies much more efficiently than GPUs, hence partially forcing Nvidia out of mining, especially within the BTC blockchain.
Nevertheless, some cryptocurrencies can still be mined only with GPUs, says Mark D’Aria, founder and CEO of Bitpro, a New York-based installation and mining operation management firm:

“It is unlikely that Bitmain can drive Nvidia *completely* off of the market – they can certainly drive Nvidia GPUs mostly out of mining certain coins, but there are many ASIC resistant coins out there, and it would be extremely beneficial for Nvidia (and AMD) if Ethereum goes through with the ProgPoW update.”

The target markets of Nvidia and solely crypto-oriented players like Bitmain are completely different, agrees Jonathan Bertrand, president of Technologies D-Central, mining equipment provider located in Quebec, Canada:

“Bitmain’s performance is closely tied to the performance of cryptocurrency while Nvidia has a wide range of markets such as gaming, AI and hash functions more general, it is not only mining operations that are hashing. Nvidia cards are excellent for the vast majority of hashing operations needed in the world, far more than an ASIC that has a single use. Not to be confused, the unique use of an ASIC is very useful, but strictly in the case of Bitcoin mining.”

Further, on Nov. 15, Nvidia released its earnings report for the Q3 of 2018. In the report, Huang revealed that the company’s “near-term results reflect excess channel inventory post the cryptocurrency boom, which will be corrected.”
Basically, while the crypto frenzy increased prices for Nvidia’s gaming cards, once that demand vanished, prices did not decrease quickly enough to attract customers who were waiting for more affordable cards. The CEO referred to this period as a “crypto hangover” in an interview with Reuters:

“The crypto hangover lasted longer than we expected. We thought we had done a better job managing the cryptocurrency dynamics.”

Nvidia’s post of sales for Q3 missed expectations yet again, and the company’s shares dropped another 17 percent. Around the same time, Goldman Sachs removed Nvidia from its list of stocks with the most potential for investors. “We were clearly wrong on the stock as we underestimated the magnitude of the channel inventory build in midrange gaming GPUs,” its analysts explained. Thus, Wall Street’s crypto-driven expectations from the hardware developer were not met.
In December, CNBC reported that in Q4 2018, Nvidia experienced a massive sell-off of its shares, cutting the stock price by 54 percent, which made it the worst performer in the S&P 500. Later that month, Nvidia even faced a class-action lawsuit over its losses. Specifically, the complaint filed by Schall law firm stated that “the Company made false and misleading statements to the market” and “touted its ability to monitor the cryptocurrency market and make rapid changes to its business as necessary.”

2019: Weak sales are likely to continue. However, the company will carry on regardless of crypto

In January 2019, Nvidia updated its financial estimates for Q4 for the fiscal year of 2019, reflecting weaker forecasted sales in its gaming and data center platforms, explained by excess midrange channel inventory following the slump in crypto market. The revenue for that quarter was now expected to be at $2.20 billion, opposed to the previous projection of $2.70 billion.
NVIDIA Revenues' Estimates
Jensen Huang said in the press release:

“Q4 was an extraordinary, unusually turbulent, and disappointing quarter.”

In addition to a lack of crypto-related business, Nvidia also cited “deteriorating conditions” in China as a indicator of lower-than-expected revenue from gaming GPU sales in Q4.
Finally, in February 2019, the United States hardware firm reported full-year revenue gains after publishing its Q4 earnings. According to the press release, its total 2018 revenue climbed 21 percent from 2017 numbers to $11.72 billion, even despite the crypto market crash. The growth was allegedly driven by all-time high sales of its gaming, data center, professional visualization and automotive products.
As a result, Nvidia’s shares jumped 8 percent after the figures were unveiled. Q4 performance turned out to be extremely low, however: Revenue was down 24 percent versus the same quarter the previous year to $2.24 billion, staying just slightly above the adjusted forecast.
Commenting on the statistics, Nvidia’s CEO stressed the market’s infamous volatility:

“The combination of post-crypto excess channel inventory and recent deteriorating end-market conditions drove a disappointing quarter.”

D’Aria of Bitpro was not surprised by those numbers, arguing that Nvidia is not that depended on its performance within the crypto market. He told Cointelegraph:

“Crypto mining was never the foundation of Nvidia’s revenue, more like a cherry on top. During the 2017 bull run it was a really big cherry, but Nvidia is one of the most innovative chip makers and they are completely dominating their competition in gaming, AI, scientific compute, etc. If crypto went away entirely, Nvidia would be just fine.”

He adds, however, that 2019 might not be as bleak for the hardware developer, especially if the market recovers enough to make GPU mining profitable again, and large projects such as Ethereum (ETH) adopt ASIC resistance measures, making more room for GPUs over ASICs. However, the frenzy times might be over for at least another few years, D’Aria warns:

“Nvidia has strong ProgPoW performance, and since they also lead AMD in general power efficiency with their latest GPUs, those two factors would definitely increase crypto mining’s contribution to their revenue, at least compared to the tail end of 2018. It’s unlikely we’ll see a return to the bonanza of late 2017-early 2018 without a another bubble, but I don’t expect that for a few more years. When that does eventually come around again, Nvidia will undoubtedly experience another huge few quarters, followed by another hangover a few quarters later.”

Similarly, D-Central President Jonathan Bertrand argues that Nvidia will stay afloat regardless of the market condition:

“I have confidence in the products of Nvidia and I am convinced that with the mining or not, the hash centers have the wind in the sails. It is the parallelization and specialization of traditional data-centers that drives us to the emergence of these new ‘hash-centers’ specialized in computing.”

Meanwhile, Bitmain has recently announced its next generation 7 nanometer ASIC mining chip, following a series of negative news caused by the crypto winter, suggesting that mining players are not giving up, but are patiently waiting for the spring to come.]]>

The Future Of Bitcoin Mining In Québec Could Rest On Monday's Parliamentary Elections

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Bitcoin could be significantly impacted by an election for perhaps the first time ever today as Québec voters go to the polls in the French-Canadian province’s parliamentary elections. The general elections are the province’s first since tensions arose earlier this year over how electricity should best be allocated for bitcoin mining. Bombarded with demand in early 2018 by miners from China and elsewhere, the provincial government – headed by the Parti Liberal du Québec – quickly applied heavy brakes to the nascent mining industry by ordering Hydro-Québec, the state-owned electric utility, to restrict the sale of power and charge higher tariffs to customers in the blockchain industry. The government pointed to grid capacity and economic development concerns to publicly justify its actions, but that explanation didn’t resonate well among many in the local industry who saw the move as a political crackdown that has chased away investment and innovation. “These measures immediately damaged numerous mining operations in Quebec and deterred investors who went elsewhere,” François Remy, a former columnist at Les Affaires, a Montreal business newspaper, told Forbes. “The crypto community is really not happy about that.” “The Québec Bitcoin eldorado is dead,” Francis Pouliot, a voice in the Montreal cryptocurrency scene, tweeted in June. But the incumbent Liberal government is at risk of being ousted in today’s elections by Coalition Avenir Québec, an upstart center-right, pro-business party that is focused on luring private sector jobs and investment to the province. The CAQ has been the frontrunners for most of the past year and holds a small advantage in preliminary polling going into Monday’s elections. While neither the Liberals, CAQ nor the separatist Parti Québécois, which is expected to place third, have taken an official stance on bitcoin mining, many locals regard CAQ’s platform as being, on the whole, friendlier to the blockchain industry. Thus, a CAQ victory could provide a fresh boost for cryptocurrency mining in the province should the new government loosen or undo the electricity sale restrictions placed on Hydro-Québec. “The (Liberal) government is about to lose the elections, and the other political parties, like Parti Québécois and CAQ seem more opened to blockchain,” said Remy, adding: “They want to attract these companies, to support them and use cheap electricity and cold climate as a competitive advantage for the Québec economy.”

Wild Ride
Québec became a magnetic attraction for cryptocurrency miners in late 2017 and early 2018 as the outlook in places like China became hazier. The province’s surplus of cheap hydroelectricity, cold weather and political stability, combined with its aggressive efforts to entice large electricity consumers, such as data centers, to invest locally made it an appealing destination for those looking to set up commercial bitcoin mining operations. Hydro-Québec was soon overwhelmed by demand from prospective miners. “The phone has been ringing off the hook,” CEO Eric Martel told Bloomberg in February. Reportedly receiving dozens of requests per day, the utility began signalling to potential customers that it would not be able to fulfill all of the connection requests. Coupled with the downturn in crypto markets, the question of how to address bitcoin mining reached the highest levels of the provincial government in March, when Premier Philippe Couillard articulated that he viewed mining in and of itself as a non-value-added activity: “If you want to come settle here, plug in your servers and do bitcoin mining, we’re not really interested.”
In May, an economic impact study commissioned by Hydro-Québec found that the amount of jobs created per megawatt by crypto miners is significantly less than for other types of large electricity customers, such as data centers. Nevertheless, post-industrial towns like Thetford Mines, where the last asbestos mines permanently closed in 2012, see bitcoin mining as a potential onramp to the new economy and as a way of re-purposing old traditional mining infrastructure. “We have 15 football fields of available buildings. We’re really interested for (cryptocurrency) mining companies to get in touch with us,” said Vicky Lachance of the Thetford Region Economic Development Corporation, who noted that she’s been in conversations with upwards of a dozen interested parties. The Québec government moved to throttle the new industry altogether on June 7, when Energy Minister Pierre Moreau declared a moratorium on all new mining projects and ordered the matter to be referred to the Régie de l’énergie, an independent tribunal tasked with setting electricity tariffs for commercial customers, for further determination. Hydro-Québec then submitted a proposal to the Régie to create a 500MW pool of electricity to be made available to blockchain customers. This pool would then be auctioned off to applicants selected based on the tariff they are willing to pay and the number of jobs they commit to creating. The tribunal is slated to hold a new round of hearings on the matter in early November. Competing
Narratives
The Liberal government and Hydro-Québec have insisted that their motives for clamping down on the mining industry have primarily been over capacity concerns – namely, that if it were to give a connection to every applicant, the province’s electricity surplus would be exhausted. The utility initially claimed to have received requests totaling 18,000MW worth of power, roughly 40 percent of its total capacity, from some 300 interested parties. Among these requests was an enormous 2,000MW request that was widely believed to have come from Bitmain, the Chinese mining and hardware giant. For context, Hydro-Québec supplies the Bell Centre arena, home of the Montreal Canadiens ice hockey team, with a five megawatt connection. Specifically, the concern is that a “heritage pool” of 1,500MW of cheap, unused electricity that is made available to attract private sector investment could be completely exhausted by the mining requests. Should that threshold be surpassed, the additional electricity must, by law, be purchased on the open market at prices higher than those offered by Hydro-Québec. These costs would then be passed along to households and small business customers in the form of higher tariffs, which would be especially unpopular during Québec’s frigid winters. A similar situation occurred recently in Plattsburgh, NY, which is located just south of the Québec-New York border. The town ultimately banned bitcoin mining last spring because of the stress it had inflicted on the local utility – resulting in outrage among the populace as their electricity bills began to increase. Other municipalities across North America are grappling with similar issues. “We at Hydro-Québec are interested by the business perspective of Blockchain,” a Hydro-Québec spokesman told Forbes. “However, given the massive interest for our clean and reliable hydroelectricity we have decided to proceed in a fashion that maximizes economic spinoffs for Québec and revenue for Hydro-Québec—in turn, pushing electricity rates down for customers.” But many local observers reckon that the official story doesn’t add up. They argue that the move to throttle the industry doesn’t make sense given Hydro-Québec’s stated goal of doubling its revenues to $27B by 2030, with data centers and cryptocurrency mining clients ostensibly serving as core customer segments. “This position was divergent from the utility’s previous efforts to attract companies using large amounts of electricity, such as cloud technology giants or bitcoin miners,” said Remy. “Québec seems to have succumbed to the purely speculative impression of digital currencies portrayed by the general media and traditional economists.” Critics blame this contradictory position on interference by the Liberal government, reckoning that Hydro-Québec had been aggressively courting large miners from China and elsewhere before the government forced it to reverse course. “Hydro-Québec now denies it, but they were seducing world-wide and local mining operations with the ‘cheapest rates’ in North America until February of this year,” said Jonathan Bertrand, who runs a mining operation outside of Montreal. Jonathan Hamel of Montreal-based Académie Bitcoin says the situation exhibits all the classic signs of political cronyism: “There’s a wide consensus both within the blockchain community and also from Hydro-Québec insiders that the mess we’ve seen since February was entirely based on political directives from the Liberal government.” Tensions between Hydro-Québec and the Liberals flared up again over the summer when Martel, a former executive at aerospace manufacturer Bombardier, became embroiled in a public dispute with Moreau over a proposed wind farm project in northern Quebec. First announced in 2015, the project has been heavily promoted by the Liberals despite Martel’s insistence that, should it proceed, Hydro-Québec would incur losses of between $1.5B and $2B over the 25 year life of the contract. Others in the local mining industry accused the Liberal government of pressuring Hydro-Québec to exaggerate the amount of demand it was receiving to justify turning away smaller entities in favor of cozying up to foreign giants like Bitmain. They argued that the 18,000MW fig
ure, as well as the monster 2,000MW proposal, are highly dubious and would dwarf the total amount of the energy currently consumed by the bitcoin network globally. In June, Hydro-Québec reduced its original 18,000MW estimate by two-thirds, attributing the revision to the drop in bitcoin prices, which would have likely deterred less serious potential clients. “I think we can easily say that there are 5,000 (to) 6,000 really solid megawatts (worth of mining demand),” Rémi Dubois, director of large power customers at Hydro-Québec, testified at a June 26th hearing before the Régie. As for the less serious potential customers, he explained: “We didn’t approach those people again.” “We didn’t get back in touch with them, given the moratorium we had set, but we expect that some of them might have decided to abandon their project. Others might have decided to go elsewhere, given the time limit we set.” Documentation submitted by Hydro-Québec to the Régie asserted that the utility was in discussions with 27 serious projects accounting for 6,500MW of electricity. However, just four of those projects made up 4,000MW of the total demand – including the 2,000MW proposal believed to be Bitmain. It’s unclear if these projects remain interested or have since abandoned Québec for other locations. Bitmain announced in August that is building a 500MW mining operation in Texas. Its recent IPO application states that it has other facilities under construction in Washington state and Tennessee, and that it is “contemplating” setting up an operation in Québec to take advantage of the cheap hydroelectricity. “In the end, this crisis is not because of Bitmain, but because of our local public institutions that, once again, cannot accurately predict business transformation and try to centrally manage everything very slowly while the world around them moves at staggering speeds,” said Bertrand.

CAQ to the rescue?

Seeing Québec’s window of opportunity to be a global blockchain hub potentially closing, locals in the crypto industry are now eyeing a CAQ victory in today’s contest as a catalyst to easing restrictions and springboarding further development of the local industry. “It’s not a secret that the blockchain industry is actively looking forward to a Liberal defeat in the upcoming election,” said Hamel. While CAQ has not taken a stance on mining in its official platform, its leader François Legault brings a pro-business, pro-growth acumen to the political arena that the province has not seen in recent decades. “CAQ has shown some support to bitcoin miners during the summer while we were stuck under the moratorium on energy sales,” said Bertrand, adding: “That said, us bitcoiners tend to be a little skeptical of the political class.” For the last half century, elections in the province have primarily revolved around the single issue of whether to secede and become an independent country or to remain part of Canada. However, the separatist momentum has lost steam in recent years, and Québec political discourse has since reverted back to the standard Left-Right spectrum seen in the rest of the Western world. “Legault has been really open about saying one of his biggest priorities as premier will be encouraging private sector investment in the province,” said Carl Vallée of Hatley Strategy Advisors in Montreal, noting that Legault is specifically focused on creating jobs, raising standards of living and making Québec more wealthy vis-a-vis the rest of Canada, adding: “He wants to be an ‘economic premier.’ You could say that Québec will be ‘open for business.’” Perhaps most encouraging for the mining industry is that Legault is pressing for Hydro-Québec to export more electricity. “There’s definitely a will from Legault to fulfill Hydro-Québec’s potential and perhaps make it even more profitable than it is right now,” said Vallée, who previously served as press secretary to former Canadian Prime Minister Stephen Harper. Neither the CAQ nor the Liberals responded to requests for comment about their respective positions on bitcoin mining.
Playing the long game
Pierre-Luc Quimper, president and founder of Bitfarms – which has set up several large bitcoin mining operations in southern Quebec – is taking a more measured approach to the elections.
He explained that while all the political parties on the ballot have expressed an interest in his company and blockchain more generally, he is still waiting to see which one emerges as a champion of the industry: “The Coalition Avenir Québec, the Parti Libéral du Québec and the Parti Québécois have all publicly expressed support for blockchain innovation, but so far there has not been a comprehensive policy that will help blockchain innovation.” Bitfarms claims to have already invested more than $20M into Québec, and it currently uses 27.5MW of electricity and employs 90 workers across its facilities. It has new mining projects in its pipeline totaling 135MW, though these have been sidelined because of the moratorium. It also has a research partnership in the works with a local university, is developing a locally-based mining pool and is working to build out other non-mining blockchain applications. Quimper says that he is proactively communicating to all of Québec’s political parties that there is a unique window of opportunity for the province to emerge as a global blockchain leader, much as it has successfully done for other industries such as artificial intelligence and video gaming, but also that there is a “sense of emergency” that this window could be closing quickly. “It’s crucial that the new government keep the hydroelectricity prices at a competitive rate and talk to Québec blockchain companies in order to establish a comprehensive framework for blockchain technology,” he said. If that doesn’t happen, there’s nothing to prevent miners and innovators from packing up and moving on. “If Québec is not proactive, blockchain innovation can happen elsewhere on the planet.” Lachance of Thetford Mines concurred: “It’s a technology revolution and we have to position ourselves in a way that will not limit the progress of these companies. It has to be a very thoughtful process.”]]>

Quebec's Bitcoin Miners Believe Bitmain and Hydro-Quebec Are Colluding against Them

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A string of tweets by Quebecois Bitcoin-mining expert Jonathan Bertrand reveals a growing negative sentiment among Bitcoin miners in Quebec. A recent string of tweets by Quebecois Bitcoin-mining expert Jonathan Bertrand has revealed a growing negative sentiment among crypto-miners within the Canadian province. The tweets come as a response to a politically charged debate in Quebec regarding the closed-auction system now being used to determine which mining operations will be allowed to buy electricity from the province. Furthermore, the tweets hint at heavy lobbying from mining-giant Bitmain as a potential reason why the province is no longer looking to sell electricity to smaller domestic mining operations. The province of Quebec offers the lowest electricity rates in North America, and during the crypto-boom of late 2017, the province became a highly desirable destination for aspiring bitcoin mining operations. At the time, the provincially owned utility, Hydro-Quebec (HQ), encouraged potential mining operations to come to Quebec, promising to sell 5TWh of electricity to Bitcoin miners over 4 years. However, in February of 2018, HQ implemented a moratorium on applications for bitcoin mining operations due to a large number of requests totaling 18000 MWh. Because the requested amount of electricity was far greater than the province could supply, the sale of electricity was halted, and a review process was implemented to help ensure these operations would generate added value for Quebec, There needs to be added value for our society; just having servers to do transaction mining and acquire new Bitcoins, I don’t see the added value. / Philippe Couillard, Premier of Quebec (Feb 2018) Now, in July, it appears as though the province is willing to consider mining applications once again, but according to Jonathan Bertrand, these considerations are not being made for the sake of Quebec or its citizens,

Jonathan Bertrand's Tweet

Bitmain is one of the largest crypto-mining operations in the world, and Bertrand and his supporting community of Quebecois bitcoin miners believe the mining-giant is trying to monopolize the industry in Quebec. Bertrand even goes so far as to accuse Bitmain of faking a number of applications in order to push the province into reassessing their offer to sell electricity to any mining operation that wants it.

Ultimately, Bertrand believes this type of lobbying is making Quebec a near-impossible place for domestic mining farms to operate, leaving many in the industry to consider leaving the province,

 

 
The situation in Quebec reflects the larger state of the crypto mining industry and has many within the space beginning to question whether entities like Bitmain can really provide mining services without compromising the integrity of decentralized networks. Bitmain is well-known for nefarious actions, and as exemplified by the Antminer X3 scandal that led to the Monero hard fork, the broader community simply cannot trust large mining pools to keep integrity at the center of their revenue strategies. Because of this, many are beginning to question whether major cryptocurrencies will be able to remain decentralized in the face of industrial progress.]]>

Hydro-Québec calls for "dissuasive" rates for crypto

<![CDATA[Hydro-Québec has applied to the “Energy Constable” to apply a deterrent rate to new cryptocurrency mining projects. Provisionally set at $ 0.15 per kilowatthour (KWh), this represents an outbreak of 200% compared to the usual rate. What cool the heat. To read rare exchanges on social networks, it looks like one more nail in the coffin of Quebec actors. “The miners of Quebec live the same thing as in China. This is not yet official, but Hydro-Quebec wants to discriminate against Bitcoin entrepreneurs with rising prices making the province the worst place in Canada to establish an emerging business, once again, “says Jonathan Bertrand, a local pioneer in the industry. head of D-Central Technologies. The Québec electricity monopoly sent this week a request to the Régie de l’énergie to urgently approve “a dissuasive tariff applicable to all new subscriptions for cryptographic use applied to block chains, as well as to any substitution of use and increase of power “. Under these provisional conditions of service that the regulator must implement, Hydro-Québec claims that the energy will be billed at a price of 15 cents per kWh for all new forms of power at rates M and LG. In other words, all companies with an existing subscription, with a power already installed, or a development project already confirmed will continue to benefit from normal rates until the establishment by the Régie of the final conditions. A “necessary” evil to control demand “in the public interest”, argues the electricity distributor. By decision to be made by July 16, the energy gendarme must also approve the process of selecting cryptographic mining projects for the allocation of a dedicated block of 500 MW for a minimum duration of 5 years, as recently suggested by the Minister of Energy Pierre Moreau by unveiling an official suspension of the processing of applications for blockchain installations (earned him since the nickname “Mr. Moratorium”). Given the obligation to serve the municipal networks (Sherbrooke, Magog, etc.), Hydro-Québec also requires that their electricity consumption be “isolated and billed separately not to the LG” but according to the conditions to be set by the Régie. And this, depending on the category of user, namely the “dissuasive rate” if it is not an existing subscription or part of the dedicated block. In the long term, Quebec tariffs dedicated to mining should thus oscillate between 0.05 to 0.15 $ of KWh. “We will be submitting the details to the Régie shortly, but we would like to receive proposals from local players regarding the rates and other peculiarities of their projects,” Hydro-Québec’s community manager told us . Who are these “players”: Bitmain ( the bitcoin giant who recently courted Hydro-Québec ), Bitfury / Hut8, GMO Internet, Halong Mining? “We are talking about more than 300 companies of all sizes, but we will ask them to make their proposal, so we can not be certain at this stage of who will and who will not,” he said. answered Hydro-Québec. True to the economic analysis provided by consulting firm KPMG, the preference of Quebec energy institutions may return to players as component designers, suppliers of mining equipment, miners and pool operators. It can drastically reduce the list of candidates, is not it? “We are interested in Quebec to open our first crypto mine, but because of the uncertainty of tariff we will wait,” says a Canadian official of a big foreign player, disturbed by this unstoppable regulatory fog. At the suggested price of 15 cents, even if it remains temporary, this pricing policy pushes miners to incur losses, up to tens of thousands of dollars per MW per month. This is the magic recipe to attract in our beautiful province only the best crypto, support the Quebec authorities for months now. The future will tell us … very soon.]]>