The Caisse de depot et placement du Québec did not fail to invest around 200 million in the American cryptocurrency bank Celsius.
Posted at 9:00 am
She is planted royally.
Last October, Caisse became a shareholder in Celsius, a bank that offered cryptocurrency lending and interest rates of up to 17% on cryptocurrency deposits. However, Bitcoin lost 65% of its value and Celsius ran out of money to cover investor withdrawals. In July, the company protected itself from its creditors. She owes them $1.9 billion but only has $167 million.
In short, we will not see our money again.
The Caisse has misjudged its risk in this area with little or no regulation, a speculative bubble where the goal is to bypass the traditional monetary system. She didn’t reflect on the ethical aspect. In addition, one bet on the wrong horse, which was already in the crosshairs of the authorities of the financial markets of some American states.
As spectacular as it is, this error must be put into perspective, put into context.
The Caisse made this investment from its $1.5 billion venture capital portfolio. Venture capitalists are like batsmen in baseball: they always hit the home run and inevitably get hit more often. What counts is the batting average.
The Caisse’s venture capital portfolio has generated a return of between 35% and 40% per year over the past five years. The Caisse’s total return on all its assets over the period: 8.9% per annum. Venture capital is therefore very profitable for the Caisse.
In addition, the Caisse puts only 0.36% of its assets into venture capital (1.5 billion out of 419.8 billion). It allows us to support our startups without jeopardizing the retirement of Quebecers.
Quebecers will have some dealings with Celsius (lesson number one: stay away from crypto), but that shouldn’t stop them from continuing to invest in venture capital.
The Caisse invests in venture capital in about twenty techno companies (none in crypto, except for Celsius), just over half of which are from Quebec. For a disaster like Celsius, there are several great Quebec techno hits like Lightspeed, Hopper and Nuvei. Don’t throw the baby out with the bath water.
Additionally, another Quebec institution should reconsider its ties to the crypto industry: Hydro-Quebec.
If the trend continues, the state-owned company will soon sell 1% of its electricity to cryptocurrency miners at a loss.
The production of cryptocurrency is very energy-intensive. Blockchain information must be mined using complex mathematical operations. It is the opposite of a financial system based on reliable and regulated financial institutions.
The state-owned company has a preferential rate three times cheaper (6¢/kWh instead of the industry rate of 18¢/kWh) for 100 Quebec cryptocurrency miners. They consume 111 megawatts or 0.3% of the total grid capacity.
But here it is, the Régie de l’énergie just forced Hydro-Québec to offer cryptos another 270 megawatts at a bargain price of 6¢/kWh.
Bitcoin miners benefit from having access to cheap electricity.
For Quebec, we are subsidizing an industry that has no economic spinoffs, has very little societal benefit, attacks the monetary sovereignty of countries, is unregulated, is used by criminal organizations to launder their money, and is very harmful to the environment.
Hydro-Québec must return to the Régie de l’énergie to find a way to overturn the decision made last fall. Otherwise, it will sell up to 1% of its electricity to cryptocurrency miners at a loss (it sells 6¢/kWh and each additional capacity costs 10¢/kWh in 2025).
It is difficult to ban cryptocurrencies.
However, we are not obliged to provide electricity at a reduced price. Not even to finance it with our wool stocking.