Which countries will be the new mining hotspots in 2022, and where can Ether and Bitcoin be mined successfully – and profitably?
China’s harsh approach toward mining, which resulted in a complete ban on such activities in September, was one of the major themes in the crypto world in 2021.
While mining as a form of financial activity has not gone away and is unlikely to do so in the near future, Chinese cryptocurrency miners have had to relocate. Many of them went to the United States, which has become the world’s new mining mecca, while others went to Scandinavia and Kazakhstan, which has inexpensive electricity.
Governments around the world have begun to express worries about electrical capacity and power outages as a result of mining activity.
Erik Thedéen, vice-chair of the European Securities and Markets Authority and director general of the Swedish Financial Supervisory Authority, has urged for a prohibition in Europe on mining proof-of-work cryptocurrencies like Bitcoin (BTC).
As governments around the world begin to crack down on mining-related activity, it prompts the question, “Where is mining crypto still profitable and legal?”
North America is located in North America.
It’s no secret that the United States is the leading country for crypto mining, notably in Texas. Crypto miners and billions of dollars of money flocked into the southern state after the flight from China. Governor Greg Abbott has actively backed the Bitcoin business, therefore this is largely due to state policy.
The reason the state became a popular destination for miners, according to Philip Salter, CEO of crypto mining startup Genesis Digital Assets, is that:
“Right present, Texas may be the most prominent destination for miners around the world. It has a surplus of affordable energy due to its massive volumes of wind and solar power. Privately controlled power grids allow new initiatives to get forward quickly without being slowed down by bureaucracy. Texas’ advantages, on the other hand, aren’t really new. Miners began constructing there years ago, though not as vigorously as they are now.”
Texas has had its own electricity infrastructure issues, with widespread blackouts impacting much of the state in 2021 due to unseasonably cold weather. However, the miners have been very aware of electricity consumption, and large businesses have even turned off equipment to give precedence to residential consumers and vital infrastructure on a regular basis.
Canada, America’s northern neighbour, has been actively courting mining businesses as well. Authorities in Alberta recently encouraged bitcoin miners to the province, emphasising the region’s low electricity prices due to a plentiful supply of natural gas.
Latin America is a continent in South America.
Latin American governments have been working hard to lure miners, with El Salvador in particular exhibiting a positive attitude toward the industry. The country was the first to recognise Bitcoin as legal tender in the globe. The Salvadoran government has made a direct investment in Bitcoin and even aims to establish a city dedicated to the leading cryptocurrency, with electricity for mining coming from volcano-fired geothermal reactors, according to reports.
Costa Rica is also becoming more mining-friendly as electricity prices fall. A hydroelectric power facility that was decommissioned during the COVID-19 pandemic has been reactivated thanks to mining.
Large crypto firms have also started to set up shop in Costa Rica. The Chia Network, founded by BitTorrent inventor Bram Cohen, has pledged to give technological support for Costa Rica’s government climate change programmes.
Argentina was a favourite among miners until the government recently decided to reduce mining subsidies and boost taxes on the industry. So far, these modifications in mining financial policies have been limited to the province of Tierra del Fuego, which is known for its harsh climate. Despite the increased electricity prices, Argentina remains a good location for mining farms, especially given the energy crisis in rival nations such as Europe.
In Europe, mining is still conceivable.
Crypto mining operations in Europe are still restricted, as high electricity prices during the energy crisis and regulators’ overall scepticism of cryptocurrencies make crypto businesses think twice about setting up shop on the continent.
Indeed, Iceland, a Nordic country with a subarctic volcanic landscape that provided cheap electricity and minimal cooling costs for mining farms, was once a hotbed for Bitcoin mining.
Landsvirkjun, the country’s national electrical utility, limited the amount of power it would deliver to energy-intensive industries like Bitcoin mining and aluminium smelting late last year, citing capacity problems.
Despite the constraints on the continent, there are a few places in Europe where miners have decided to set up shop, where location and climate play a key role in luring industry.
The enormous number of hydroelectric power plants built during Georgia’s period as a Soviet republic — combined with the country’s comparatively small population — have given a large supply of cheap electricity for miners in the Caucasus region.
Major cryptocurrency mining firms have already established operations in the nation. Bitfury, a Dutch mining firm, opened its first data centre in Gori, Georgia, in 2014, with a capacity of 20 megawatts.
Many Georgians became interested in crypto mining after Bitfury’s success, and they began to buy powerful video cards and set up their own tiny crypto mining farms. According to the World Bank, cryptocurrency mining employed 5% of Georgia’s population in 2018.
It’s also worth noting that, because to low energy prices and a frigid climate, Russia remains a crypto mining hotspot.
Andrei Loboda, the public relations director of BitRiver, Russia’s largest cryptocurrency mining colocation services provider, told that if the Russian government becomes more supportive of cryptocurrencies, miners will be able to work in the following areas:
“According to BitRiver, around 300,000 people are mining Bitcoin in the Russian Federation alone now.” In data centres across the Russian Federation, including the Irkutsk Region and the Krasnoyarsk Territory, our company performs energy-intensive, high-speed processing. The green and digital technologies that we use in our work as part of the digital energy transition have already provided the areas a boost in development.”
Is it worthwhile to mine?
Whether it’s for electricity and cooling expenses or regulatory issues, miners must consider geography. However, some expenses, including as gear, will be carried with miners wherever they go.
When, with all the hardware expenditures, is mining worth it? With demand for mining equipment on the rise and a recent drop in the markets following the bull run of 2021, when is mining worth it?
Since 2016, the year 2021 has been the most profitable for mining Ether (ETH) with graphics processing units. This is unsurprising, given that the price of Ether has more than doubled in the last year. However, the biggest concern for miners is the cost of electricity and equipment, which is continually increasing.
Nonetheless, while Ether mining profitability remains high, the payback period for equipment purchases is lengthening, owing in part to the August 2021 London hard fork, which lowered the payment for each block mined from 8–20 ETH to 2 ETH. Another disadvantage for miners will be the much-anticipated switch to a proof-of-stake consensus on the Ethereum blockchain, which would require them to start mining altcoins or recertify as stakers on the network.
Despite the sharp drop in BTC’s price in January, which touched a monthly low of about $34,300, the Bitcoin network’s mining difficulty just reached an all-time high.
In light of this, it’s surprising that the cost of ASICs hasn’t decreased. At the same time, this year’s ASIC payout term is just over 1,000 days, or nearly three years. Not everyone can afford to carry those costs for an extended period of time.
There are numerous changing elements that miners must consider, but one thing is certain: cryptocurrency mining is a flexible, adaptable sector, and companies have demonstrated their willingness to relocate to more advantageous sites if their current one proves to be less than perfect.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
