The main theme of the crypto community in 2021 was China’s aggressive policy towards mining. This led to a total ban on such activities in September.
Although mining is still a financial activity and will not disappear, cryptocurrency miners in China had to find a new location to establish their business. Many of them relocated to the United States, the new global mining hub. Others went to Scandinavia or to Kazakhstan with its cheap electricity.
Mining activities cannot be hidden forever. Governments around the globe have started to raise concerns about electricity capacity and power outages .
Erik Thedeen is vice-chairman of the European Securities and Markets Authority and also serves as the director general of Sweden’s Financial Supervisor Authority. He has called for an end to mining proof-of work cryptocurrencies such as Bitcoin ( BTC) in Europe.
As mining-related activities are being regulated in different countries around the globe, it raises the question, “Where is it still economically and legally profitable to mine crypto?”
North America
It is no secret that crypto mining is a major activity in the United States, especially in Texas’ Lone Star State. The exodus of Chinese crypto miners led to a flood of capital and millions of dollars into the state. This is due in large part to state policy. Governor Greg Abbott actively supported Bitcoin.
Cointelegraph was told by Philip Salter, CEO and founder of Genesis Digital Assets crypto mining company, that the state is a popular choice for miners because:
Texas is the most popular location for miners in the world right now. The country’s large amounts of solar and wind power have created a surplus of energy that is affordable. Privately owned power grids allow for fast development of new projects without the need to go through slow bureaucracy. Texas’s benefits are not new. There were miners who started to build there years ago, even though not as aggressively as they are now.
Texas has had its own issues with electricity infrastructure. In 2021, large blackouts affected much of the state due to unseasonable winter storms. However, miners in Texas have shown a lot of understanding regarding electricity consumption. Large companies even have turned off equipment from time to time to give priority to residential customers and to protect critical infrastructure.
Canada, America’s northern neighbor has been actively seeking out mining companies. Recent invitations to cryptocurrency miners from Alberta were made by authorities. They cited the province’s low electricity prices due to its abundance of natural gas.
Latin America
Latin American countries have made great efforts to attract miners. El Salvador is a good example of this. It was the first country to recognize Bitcoin as legal tender . The Salvadoran government has not been afraid to invest directly in Bitcoin. It even plans a city dedicated exclusively to this preeminent cryptocurrency. According to reports, the electricity required to mine BTC from these geothermal plants will be generated by volcano-fired volcanic rocks.
Due to the low electricity prices, Costa Rica is becoming more mining-friendly. A hydroelectric power station that was shut down during the COVID-19 epidemic has been reopened thanks to mining.
In Costa Rica, large crypto companies have also set up shop. Bram Cohen, BitTorrent’s founder, created Chia Network, which is a blockchain network that provides technical services to Costa Rica’s national climate-change initiatives.
Argentina was very popular with miners before the government cut subsidies and raised taxes on mining activities. These financial policy changes to mining have been limited to Tierra del Fuego. This province is well-known for its cold climate. Despite the fact that electricity prices have increased, Argentina is still a great place to start mining farms, especially when you consider the energy crisis in Europe.
It is still possible to mine in Europe
The number of crypto mining operations in Europe is still limited due to high electricity prices and the general distrust that regulators have for cryptocurrencies.
The Nordic nation of Iceland, which is located in the subarctic volcanic terrain, was once a hotspot to Bitcoin mining. It provided cheap electricity and low cooling costs for its mining farms.
However, Landsvirkjun (the country’s national electricity company), reduced the power it could provide to energy-intensive sectors like Bitcoin mining or aluminum smelting due to capacity concerns.
Despite the limitations of Europe’s continent, there are still a few places in Europe where miners have chosen to open shops where climate and geography play an important role in attracting business.
Georgia is located in the Caucasus Region. The large number of hydroelectric power stations built during Georgia’s Soviet period, along with the relatively small population, have provided miners with cheap electricity.
There are several major crypto mining companies that have established operations in the country. In 2014, Bitfury , a Dutch mining company, opened its first data centre, drawing 20 megawatts in the eastern Georgian town of Gori.
Many Georgians saw the success of Bitfury as an opportunity to invest in powerful video cards and start their own crypto mining farms. According to the World Bank, 5% were involved in crypto mining in Georgia in 2018.
Also, it should be noted that Russia is still a major center for crypto mining due to its low energy costs and cold climate.
Andrei Loboda is the public relations director at BitRiver, the largest provider of cryptocurrency mining colocation services in Russia. He shared his knowledge with Cointelegraph about the regions that miners will find it convenient to work if Russia becomes more supportive of cryptos.
According to BitRiver today, around 300,000 people are mining Bitcoin in Russia. Our company provides high-speed, energy-intensive computing services in data centers located in several Russian Federation regions including the Irkutsk Region, and the Krasnoyarsk Territorial. As part of the digital energy transformation, we have given the region an extra boost with the green and digital technologies we use.
Is mining worth it?
Miners must consider geography when considering electricity, cooling costs, or regulatory issues. There are certain expenses that miners must consider, such as hardware.
What is the value of mining with all its hardware costs, rising demand for mining equipment and recent market slumps after the bull run 2021?
2021 was the most profitable year for mining Ether ( ETH) using graphics processing units. It is not surprising that Ether’s value has more than quadrupled in the last year. The main problem for miners is electricity, which is increasing rapidly.
While Ether mining is profitable, the payoff time for equipment purchases is increasing. This is partly due to the London Hard Fork in Aug 2021, which reduced the payout per block from 8-20 Ethereum to 2 ETH. The long-awaited transition of Ethereum blockchain from a proof-ofstake consensus to ethereum-london-hard-fork-goes-live/amp will also be a negative for miners. After that, they will need to begin mining altcoins and recertify their status as stakers.
Despite the sharp decline in Bitcoin’s price in January which saw it drop to $34,300 per month, the Bitcoin network’s difficulty mining reached an all-time high.
It’s not surprising that ASICs cost didn’t drop in this context. The payoff period for ASICs this year is just over 1,000 days or nearly three years. These expenses are not affordable for everyone.
While there are many factors that change, miners must consider them all. One thing is certain: Cryptocurrency mining can be flexible and adaptable. Firms have shown they are open to moving to better locations if their current location proves less than ideal.
