WATCH: Quebec wary of Bitcoin craze

At a former cocoa factory in Canada's Quebec province, tiny holes punctured in the walls allow fresh outside air in to cool the thousands of whirring computer processors connected by a tangle of wires.

Yessoulou Coulibaly watches over the more than 7,000 computers hidden away at Bitfarms in the nondescript warehouse in Saint-Hyacinthe's industrial park east of Montreal. He is among the cryptocurrency miners flooding Quebec in a bid to transform the Canadian province into the Silicon Valley of blockchain.

Blockchain is a digital ledger in which cryptocurrencies are recorded: the more power a mine adds to the global chain, the more potential gains accrue.

But some authorities leery of the new technology are putting a damper on the rush.

The deluge of miners jumping on the bandwagon are lured by Quebec's plentiful, cheap electricity and below average temperatures, akin to Iceland where a sister bitcoin blitz is underway.

In March, a number of Quebec municipalities have slapped moratoriums on new cryptocurrency factories amid fears the spike in demand could lead to power blackouts, while the province's government and the Hydro Quebec public utility have halted new projects to better understand the technology and its greater economic impact.

The first to react was the tiny municipality of Bromont, east of Montreal, where a new bitcoin operation asked to consume 30 MW of the town's total available excess power of 36 MW.

Soon after, the neighboring township of Brome, Missisquoi imposed a similar ban on new bitcoin mines.

"Most of the business requests that we had in our region to open computer warehouses to mine cryptocurrencies would result in very little job creation," said the town administrator, Robert Desmarais.

"We can't predict the future for this industry," said Marc-Antoine Pouliot, a Hydro Quebec spokesman.

Authorities, he explained, want to "want to see first how projects can be established in Quebec in a sustainable manner," he said, not ruling out a hike in electricity rates.

According to Pouliot, the dash began last September after China started moving to stamp out cryptocurrency trading.

Quebec has received proposals for projects that would use more than 9,000 MW combined, out of Hydro Quebec's total 40,000 MW capacity -- equal to the power consumed by 83 percent of Quebec households.

Most of the interest to relocate to the province has so far come from China, according to Pouliot. Russian investors have also expressed interest, say organizers of the first international blockchain summit to be held in Montreal in April.

In Quebec "electricity is affordable, abundant and green," Pouliot said, noting massive hydro electric dams in the north generate most of the power. The cool weather also means factories require less air conditioning.

Add those factors to bitcoin's soaring valuation -- which peaked at $20,000 in December -- and Canada has itself a modern-day gold mine.

But the amount of hydroelectricity needed to power the continuously operating computers mining cryptocurrency has given pause to both the power authority and governments at the province and municipal level.

To the skeptics, Pierre-Luc Quimper, president of Bitfarms, said his startup already employs 90 people.

"It's like a traditional mining company that digs up gold and sells it, but 2.0," he said of his company, which channels computing power to mine bitcoins and other cryptocurrences.

The internet entrepreneur made his fortune starting a web hosting and cloud services business at age 14. Now in his 40s, he says blockchain is "a new technology that can be compared to the Internet" in in terms of "revolutionary" potential.

He started Bitfarms last year after first mining bitcoin at home.

Today, the Quebec company claims to be the North American leader in cryptocurrencies and blockchain technology, and is listed on the New York and Tel Aviv stock exchanges.

In its first two months of operation in November and December, Bitfarms earned $4.9 million selling virtual currency coined at the Saint-Hyacinthe and three other mines in Quebec.

"For now, we use cryptocurrencies to finance our infrastructure, and support future blockchain applications," said Quimper from his windowless office.

He is convinced the technology will be applied to industries including banking, aviation and transport.

The company already uses 27.5 megawatts (MW) to power 19,000 computers, and is aiming to boost its usage to 100 MW by the end of this year.

"If electricity prices spikes, however, we will look elsewhere," he said, pointing to abundant power sources available also in the Canadian provinces of Newfoundland and Manitoba.

He's confident the investment is worthy: "I did not miss the boat for the Internet, I do not want to miss the boat for blockchain."