Original Published on Sep 15, 2022 at 07:46
By Marc Lalonde, Local Journalism Initiative Reporter
The Mohawk Council of Kahnawake announced that it will apply for an extra power allocation with an eye on mining cryptocurrency last week – with the caveat that the extra power allocation may not come at all.
The MCK gave permission to the newly-created Kahnawake Blockchain Technologies and provided authorization to apply for a power allocation from Hydro-Québec for ‘cryptographic use.’
The application for the extra power allocation will go through the MCK, Chief Mike Delisle said.
If Kahnawake Blockchain Technologies – through the request made by the MCK — is successful in receiving a block of power, it will consider the economic and environmental feasibility of operating a small cryptocurrency mining operation in partnership with a professional service operator with an existing track record in the industry, an MCK statement said.
The idea, said entrepreneur Paul Rice, would be to allow the community to partner in cryptocurrency mining with no downside.
If the Hydro-Quebec power allocation is granted, Kahnawake Blockchain Technologies would work with Pow.re to set up a crypto mining facility in prefabricated trailers on land in the community that has been designated as appropriate for commerce and would require no land clearing, Rice said.
The expected “six-figure” lease that Pow.re would pay the community is the start. From there, the company is prepared to share profits if cryptocurrency continues to gain value on the economic market. If their value declines, he said, there would be no risk for the MCK, and by extension, the community.
“I am a Mohawk of Kahnawake,” Rice said. “I would not want to expose my community to the risk, so this would allow us to de-risk the process for Kahnawake. We also hope to make available some of the extra power allocation – if it is granted – with community members, so they can begin mining cryptocurrency for themselves, if they would like to do that. That’s how we want to structure it.”
The dedicated block of power will be issued by Hydro-Quebec at a yet unknown date on a first-come, first serve basis – therefore there is no guarantee that Kahnawake Blockchain Technologies will be successful in receiving the power allocation.
Cryptocurrency mining requires access to an abundance of low-cost power in order to operate computers (mining rigs) profitably – these computers run complex algorithms in a race to find the solution to a problem, at a cost-effective rate.
“You need a certain amount of renewable energy power allocation to make it worth it,” Rice added.
MCK lead on economic development Mike Delisle said the deal is obviously still in the preliminary stages, but he is hopeful for the possibilities as they relate to the benefits to the community.
“This is a purely preliminary action being taken to ensure Kahnawake has an opportunity to participate in the economic opportunities that are being presented,” Delisle said. “The fact that the proposal brought forth by our financial team was supported unanimously clearly shows that there is merit in exploring the possibilities in this technology for the befit of the community. However, we should caution that this is in the first stage of exploration. There are no guarantees, but it’s best to be prepared – and to aim high.”
In addition, Kahnawake Blockchain Technologies will also look at whether it is feasible to recapture the heat generated from the computers to use in other operations that could benefit the community.
Delisle emphasized that no contract has yet been signed with the crypto-mining investors and that the deal is very much dependent on getting that extra power allocation – of which there are no guarantees.
“You can’t have one without the other,” he said.