EOS Canada and Hydro-Québec Board Member Faces Calls to Recuse Himself - Bitsonline

EOS Canada and Hydro-Québec Board Member Faces Calls to Recuse Himself

The co-founder and chairman of EOS Canada, one of the block producers on the EOS network, is facing calls to recuse himself from decisions that could affect crypto-related businesses made by the board of Hydro-Québec, of which he is a member. The largest electric utility in Canada recently received permission to increase the rates it charges proof-of-work miners in the province of Quebec.

Also see: Nasdaq Inc. Reaching Out to Exchanges to Help Bring Crypto Into the Daylight

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Chairman of EOS Canada Could Have Conflict of Interest

A spokesman for Hydro-Québec, Serge Abergel, told the Journal de Montréal that François Lafortune, who is the co-founder and chairman of EOS Canada, a block producer for the EOS network, should recuse himself from participating in boardroom discussions relating to the treatment of crypto-related businesses by the public energy utility.

At issue is the fact that EOS, a newly launched blockchain-based smart contract platform, is in direct competition with other blockchain networks, like Bitcoin and Ethereum, that rely on the energy intensive proof-of-work consensus algorithm to operate.

EOS, which uses an alternative algorithm called proof-of-stake, has no need of the large so-called “mining farms” that have sprung up around the world in recent years. EOS launched its mainnet in mid-June – though not without complications – and selected 21 so-called “block producers,” or network nodes, of which EOS Canada was the top vote-getter. That came after Block.one raised $4 billion USD in one of the largest initial coin offerings in history. Earlier this month, the company that developed EOS, Block.one, announced an investment round led by American investor Peter Thiel and Chinese ASIC manufacturer Bitmain.

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After the Journal de Montréal published an article on the links between Lafortune and EOS, Hydro-Québec posted a letter on its website entitled “Hydro-Québec and Cryptocurrencies: Correction of Facts,” which it then later deleted. The letter said, among other things, that the Hydro-Québec board has not yet taken a decision about cryptocurrencies. While technically true, the utility did in mid-June ask la Régie de l’énergie, a provincial government body, for permission to increase the rates it can charge to companies intending to use the energy for “cryptographic uses applied to blockchain.” The request was approved by la Régie on July 13th.

It seems that there is pressure for Lafortune to recuse himself from further discussions, as some, like Abergel, are arguing that he, as the chairman of EOS Canada, has an interest in impeding the development and adoption of rival cryptocurrencies like Ethereum and Bitcoin, and is potentially able to do so via his position on the Hydro-Québec board.

Quebec a Global Hotspot for Crypto Miners

In recent years, Quebec has become a popular destination for crypto-related businesses, both local and foreign, looking to set up energy-hungry proof-of-work mining farms. This is due to the fact that the province has some of the cheapest electricity in North America, thanks to its abundant hydropower. As a result of this, Hydro-Québec said it has been asked for up to 18,000 megawatts of electricity from crypto-mining companies. The current total output of the utility, which is the largest in Canada and has a monopoly in Quebec, stands at around 38,000 megawatts. There are currently 1,155 megawatts being used by crypto-related businesses, according to journalist François Remy.

Faced with overwhelming demand, the utility fears being unable to meet its peak winter demand if all the applications were approved. So, with the stated purpose of preserving its capacity for the public and other businesses, Pierre Moreau, the Minister of Energy for Québec, made an official decision in early June allowing Hydro-Québec to ignore requests for electricity from crypto businesses until at least September 15th.

At the same time, Moreau said that 500 megawatts of electricity would be allotted to crypto firms, who would be selected via a new process by Hydro-Québec in the near future. This is an amount which could be increased by 120 megawatts. He also asked la Régie de l’énergie to look into the burgeoning cryptocurrency industry, which is seen in Quebec as having economic upsides but also being financially risky, with possible negative consequences for society and the environment.

Quebec Canada flags

Disappointment from Crypto Industry in Quebec

The recent decision by la Régie de l’énergie was met with dismay by some in the local cryptocurrency community, who feel that the Hydro-Québec and the government are smothering the nascent crypto industry in its crib. Francis Pouliot, CEO of Bitcoin payment service bylls.com and co-founder of Catallaxy, a crypto expertise center, told Bitsonline that:

“The government of Quebec under Liberal management killed the goose that would have laid golden eggs for future generations of Quebecers. The timing and manner of Hydro-Québec’s dramatic change of opinion, which began as extremely supportive of Bitcoiners’ efforts to bring Bitcoin miners to Quebec and changed to open hostility during the Régie de l’énergie, could indicate interference of politicians on our independent bureaucracy and crown corporations, a tactic historically used in Quebec to gain favours in the wake of important elections such as Quebec’s upcoming historic elections in October 2018.”

While local entrepreneurs seem less than pleased by recent government decisions, it’s unclear what international firms like Bitmain think of the decision. There has been speculation that the ASIC manufacturing giant could soon be setting up shop in Quebec, as a company called Équipement Bitmain was registered in the province in June.

Have your say. Should governments be more supportive of cryptocurrency and blockchain mining operations?


Images via Pixabay

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