Post-ban cryptocurrency mining paradise from China.
One of the main topics most discussed by the crypto community in 2021 was China’s negative mining policy, which led to an outright ban crypto on the sector in September.
While global mining activity hasn’t gone away, Chinese crypto miners have had to look for a new place to set up new farms. Many of them relocated to the United States, the new Mecca of the crypto mining space, while others relocated to Scandinavia and Kazakhstan where cheaper electricity is available.
Mining operations can’t stay out of sight forever, and governments around the world have begun to worry about capacity overload and power outages.
Erik Thedéen, Vice President of the European Securities and Markets Authority and Director General of the Swedish Financial Supervisory Authority, has called for a ban on mining proof-of-work cryptocurrencies like Bitcoin (BTC) in Europe.
As jurisdictions around the world begin to crack down on mining-related activities, the question arises, “Where is the legal place to mine cryptocurrency?”
The United States is currently one of the leading countries in the cryptocurrency mining industry, specifically the Lone Star State, Texas. After the exodus from China, cryptocurrency miners and billions of dollars in capital flooded the south of the country. This is largely due to state policy that Gov. Greg Abbott had support Positive for the bitcoin industry.
Philip Salter, CEO of mining company Genesis Digital Assets said:
“Currently, Texas is the cheapest region for miners in the world. Its enormous amount of wind and solar energy creates an energy surplus, so it has very competitive electricity prices. The private power grid ensures quick setup of new projects without the hassle of slow bureaucracy. That’s why the miners came to the area years ago.”
Texas has had its own power infrastructure problems, with widespread power outages affecting much of the state in 2021 amid freak winter storms. But miners are relatively familiar with power consumption, and large miners even turn off equipment on a regular basis to prioritize residents and critical infrastructure.
America’s northern neighbor Canada is also active attract excavator. Recently, Alberta authorities invited cryptocurrency miners to the province and advertised cheap electricity rates thanks to the abundant local natural gas.
Latin American countries have made great efforts to attract miners, most notably El Salvador, which shows a friendly attitude towards the mining sector. The country was the first country in the world to recognize bitcoin as legal tender. The Salvadorian government has not hesitated to invest directly in Bitcoin and even plans to build its own city where electricity for BTC mining will come from geothermal plants.
Costa Rica is also slowly becoming crypto mining friendly due to low electricity prices. Thanks to mining, a hydroelectric power station that was closed during the COVID-19 pandemic is now open door Return.
Big crypto companies have also started found operates in Costa Rica. Chia Network, the blockchain network founded by BitTorrent founder Bram Cohen, has agreed to provide technical services to Costa Rica’s national climate action initiatives.
Argentina was very popular with miners until the government decided to cut subsidies and increase taxes on mining operations. So far, the crypto mining industry’s fiscal policy changes have been limited to Tierra del Fuego province, known for its cold climate. However, Argentina remains a good place for mining farms even after rising electricity prices resulting from the energy crisis in highly competitive regions like Europe.
Crypto mining is still possible in Europe
Cryptocurrency mining in Europe remains relatively limited due to high electricity prices during the energy crisis and general regulatory skepticism towards cryptocurrencies. This makes crypto companies think twice before setting foot on the continent.
In fact, the Nordic country of Iceland, with its subarctic volcanic landscape, cheap electricity, and low cost of cooling devices, used to be a hotspot for bitcoin mining.
A Genesis Mining mining farm in Iceland | Source: Marco Krohn
Late last year, however, the country’s national electricity company, Landsvirkjun, cut the amount of electricity it supplies to energy-intensive industries like bitcoin mining and aluminum smelting, citing concerns of overheating.
Despite the restrictions on the continent, many miners still choose to set up mining pools in some locations where geography and climate play an important role in attracting businesses.
In Georgia, which is in the Caucasus region, the large number of hydroelectric power stations built during the Soviet Republic era, combined with a relatively modest population, provided large amounts of cheap electricity for miners. Major cryptocurrency miners have settled in the country.
In 2014, the Dutch mining company Bitfury opened center its first data with an output of 20 megawatts in the city of Gori in eastern Georgia.
Bitfury’s success has prompted many active Georgians to buy powerful graphics cards and set up their own small cryptocurrency mining farms. According to the World Bank, 5% of Georgia’s population is affected participation Cryptocurrency mining in 2018.
It should also be noted that Russia remains the top crypto mining center in the world thanks to its low energy costs and cold climate.
Andrei Loboda, PR Director of BitRiver, the largest provider of localization services for cryptocurrency mining in Russia, shared some specific regions where miners can operate quite favorably if the Russian government provides more cryptocurrency support:
“According to BitRiver, about 300,000 people are currently involved in bitcoin mining in the Russian Federation alone. Our company performs high-speed, energy-intensive computing in data centers located in several regions of the Russian Federation, including the Irkutsk region and the Krasnoyarsk region. We are now implementing green technologies as part of the digital energy transition and giving further impetus to the development of the regions.”
Crypto Mining Industry Profits
Geography is an important factor for miners to consider in terms of equipment cooling and electricity costs or regulatory concerns. However, you also have to take care of some fixed costs like hardware.
Given the surge in demand for mining equipment and the recent market slump after the 2021 bull market, is mining profit worth the cost?
Homemade bitcoin mining rig with GPU | Source: Bitcoin Wiki
2021 was the most profitable year for GPU mining Ether (ETH) since 2016. This is not surprising as Ether’s price has quadrupled over the past year. However, the main problem for miners is the rapidly increasing cost of electricity and equipment, as well as their prices.
However, while ether mining profitability remains high, the payback period for equipment purchases is increasing, in part due to the August 2021 London hard fork that reduced the payout per mined block from 8 to 20 ETH to 2 ETH. Another negative factor for miners will be the transition of the Ethereum blockchain to a proof-of-stake consensus algorithm. After the transition, miners must start mining other altcoins or choose to become a staker of the network.
Bitcoin network difficulty recently hit the ATH level despite a sharp price drop in January, hitting a monthly low in the $34,300 region.
What is surprising is that in this context, the cost of ASIC equipment has not decreased. At the same time, the payback period of ASIC this year is more than 1,000 days, or almost three years. Not everyone can afford these costs over such a long period of time.
There are countless changing factors miners need to consider, but one thing is clear: cryptocurrency mining is a flexible, adaptable industry, and companies have proven they are willing to relocate to more profitable locations when their profits are less than they want .
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