An Open Plea to Quebec on Bitcoin Mining

An Open Plea to Quebec on Bitcoin Mining

UPDATE: Cliquez ici pour lire cet article en français.

At the close of 2017, it looked as if you were going to be the Galt’s Gulch of cryptocurrency mining, a place where a new wave of entrepreneurs could establish the underpinnings of the next generation financial system enjoying favorable power rates and government regulation. You seemingly dashed those dreams in March of 2018 when all applications to build mining farms that would utilize power from Hydro-Quebec, a state-owned institution, were rejected. We were delighted to hear you had lifted the moratorium, understanding that the current $0.15/kw price tag is a temporary measure while you sort out what rate, tariffs, and obligations you assign to those who wish to consume the 500MW of power you have allocated to this purpose.

To that end, we implore you – Structure that Resistance!

Let us explain what we mean…

The Only Tangible Output of Mining is Heat

If you allow Bitcoin (or any other proof-of-work cryptocurrency) to be mined using half a gigawatt of energy, we want to make sure you don’t just see that as a line item on a balance sheet, but truly understand what that translates to in the real world. That electricity is about to be converted into almost pure heat – roughly 50-100°C – with a 90-92% efficiency. That’s a lot of power, and a lot of heat. For context, that’s enough power to power almost half a million homes. The good news is that it’s Hydro power, it therefore wouldn’t considerably contribute to greenhouse gas emission.

The other resource generated by this equipment is obviously cryptocurrency which by its very nature is a borderless asset. Those who receive the payouts of the miners could reside anywhere in the world and have access to those funds, potentially without the ability to be taxed on it if they don’t reside or have some special tariffs within your region. This is one of the core features of a cryptocurrency, but admittedly from your perspective as a provincial government, it doesn’t help you much.

So other than heat, what other benefits to the community would this allocation of resources provide? The thinking, as with other low-energy-cost regions such as upstate New York and the Pacific Northwest, is that it will create many new high tech new jobs that will participate in the local economy. There’s just one problem with that line of thinking:

This will create no new jobs in Quebec.

None. The amount of jobs this potentially billion-dollar business will generate is statistically insignificant.

Seriously, none. We as a company offer automated mining software (shameless plug) that allows us to operate mines all over the United States like they’re in the same room together, being monitored by a passably-competent junior employee. You will add no economic value to the region beyond the taxes and tariffs. Any auxiliary benefit from payroll taxes and job creation will not happen to the extent that you’d need in order to feel good about the decision.

In many cases, energy rates are subsidized to bring industry into a region. Tax payer subsidies are meant to come back in the form of intangible benefits from people living and working in the community: patronage at local businesses, income taxes, all that macroeconomic good stuff. These workers might come for a week to plug in the units and will no longer be needed. You’d be subsidizing ~500MW of local heat production and lining the pockets of [potentially] foreign investors, while simultaneously working to centralize mining infrastructure which could earn you the ire of the nascent market you’re attempting to court.

We believe however there is something you as the Provincial Government of Quebec can do.

Structuring the Resistance

You have an unprecedented opportunity to demonstrate to the world how mining could be made symbiotic with the local community. Simply repurpose the heat!

A mining rig is effectively a very efficient electric space heater. It takes electricity from the wall, squiggles the electrons through resistors and circuits which pop out in the form of heat (pardon our gross oversimplification). It just so happens that the various circuits the electrons squiggle through aren’t random – they’re hash functions that provide value to the network. That being said, your neck of the woods gets pretty cold and might have some use for half a million space heaters. We can think of a couple:

We don’t have all the answers; perhaps you could crowdsource proposals and defer to the creativity and needs of your citizens. We just think it seems like such a waste to use all of that energy to double the ambient air temperature above a few industrial complexes when there’s a much larger opportunity to innovate.

Think about it, Quebec. You can always reach out to us and our network of miners if you want to collaborate.

Sincerely,

The Miners’ Union

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