Vancouver Sun

Forestry firms see op­por­tu­nity in cryp­tomin­ers

- AL­LI­SON LAM­PERT Business · Blockchain · Canada News · Cryptocurrencies · Financial Technology · Finance · Quebec · North America · United States of America · Forest · Resolute · Chad · Montreal · Gatineau · KPMG Corporate Finance · Beijing · Israel · NASDAQ · Toronto Venture Stock Exchange · Toronto · Tel Aviv · Karl Blackburn · Dominique Anglade

At least two Que­bec forestry com­pa­nies are re­view­ing of­fers by cryp­tocur­rency min­ers who want to lease ex­cess mill space, be­cause elec­tric­ity prices in the prov­ince are among the low­est in North Amer­ica.

Res­o­lute For­est Prod­ucts and Fortress Global En­ter­prises said they have re­ceived in­ter­est from Cana­dian and for­eign cryp­tomin­ers, al­though both cau­tioned their talks are pre­lim­i­nary.

“They want space and cheap power,” Chad Wasilenkof­f, chief ex­ec­u­tive of Bri­tish Columbi­abased Fortress Global, said. U.S. min­ers are in­ter­ested in space at the com­pany’s Que­bec dis­solv­ing pulp mill, he added.

A surge in de­mand for space to build data cen­tres that “mine” dig­i­tal cur­ren­cies of­fers po­ten­tial new rev­enue streams for Cana­dian forestry firms look­ing to find uses for space in mills no longer used for pro­duc­tion due to de­clin­ing de­mand for cer­tain tra­di­tional in­dus­try prod­ucts.

Mon­treal-based Res­o­lute may hold a call for ten­ders as a way to at­tract well-cap­i­tal­ized cryp­tomin­ers ea­ger for space at the com­pany’s mill in Gatineau, Que., and other sites.

“We are get­ting in­quiries ev­ery week,” said Res­o­lute spokesman Karl Black­burn. “We have space that could be used but there are still a lot of ques­tions.”

Min­ers are look­ing at the pulp and pa­per in­dus­try be­cause their fa­cil­i­ties are al­ready equipped to meet the needs of the en­er­gys­ap­ping cryp­to­min­ing in­dus­try, said Lau­rent Feral-Pierssens, blockchain ad­vi­sory lead at KPMG Canada.

Cryp­to­min­ing con­sumes large quan­ti­ties of en­ergy be­cause it uses com­put­ers to solve com­plex math puz­zles to val­i­date trans­ac­tions in the cryp­tocur­rency, which are writ­ten to the blockchain, or dig­i­tal ledger. The first miner to solve the prob­lem is re­warded in cryp­tocur­rency and the trans­ac­tion is added to the blockchain.

The threat of a crack­down in coun­tries like China has driven min­ers to Canada, with the coun­try’s largest electric util­ity, Hy­droQuébec, see­ing its cryp­tocur­rency sales pipe­line more than triple in a month to over 100 projects, spokesman Marc-An­toine Pouliot said.

Is­rael’s Blockchain Min­ing Ltd. is set this month to buy con­trol of Canada’s Back­bone Host­ing So­lu­tion, known as Bit­farms, and is pre­par­ing to list its stock on Nas­daq and the Toronto Stock Ex­change af­ter Is­rael’s mar­ket reg­u­la­tor said it might ban com­pa­nies in­volved in cryp­tocur­ren­cies from the Tel Aviv ex­change. Bit­farms al­ready mines at four sites in Que­bec and the com­pany ex­pects to open three more fa­cil­i­ties.

Feral-Pierssens said re­cent de­clines in value of bit­coins are un­likely to de­ter min­ers who un­der­stand the “volatile na­ture of the crypto-as­set” they are pro­duc­ing.

“Their model is straight­for­ward and projects will con­tinue to emerge as long as a re­turn can be made,” said Feral-Pierssens, who is also a part­ner in a ven­ture cap­i­tal firm aimed at the blockchain in­dus­try.

Que­bec Econ­omy Min­is­ter Do­minique Anglade said by email that while cryp­tocur­rency min­ing rep­re­sents in­ter­est­ing growth po­ten­tial for Que­bec, the gov­ern­ment has the “re­spon­si­bil­ity to re­main pru­dent” to­ward the fledg­ling sec­tor.

Canada is also draft­ing reg­u­la­tions “to mit­i­gate the money laun­der­ing and ter­ror­ist fi­nanc­ing risk of vir­tual cur­ren­cies,” a gov­ern­ment spokes­woman said, al­though it is not clear when they will be made pub­lic.

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