Cryptocurrency mining is an industry on the rise. Mining is one of the most integral parts of the entire crypto industry, and the activity can be highly lucrative- especially if the asset you choose to mine is Bitcoin.
For companies looking to set up a mining shop, it’s essential you find the perfect locations to get this done. That’s why we have developed this guide. This guide focuses only on Bitcoin mining. While numerous other cryptocurrencies could be mined, Bitcoin is by far the most profitable of the bunch.
Mining hotspots could be grouped based on two factors:
- Market prominence
Mining businesses are created for the sole purpose of making profits. However, cryptocurrency mining is costly to run due to the power it consumes. To be profitable, the miner has to set up shop in countries where the power bills are lower than the cost of the asset being mined. Kuwait and Iceland are good examples of countries with cheap electricity.
Another factor you might want to consider is the prominence of the market when making a decision. This factor takes two things into consideration- the popularity of Bitcoin mining, and how the government feels about it. When you choose a country due to market prominence, you’re looking at a country with favorable bitcoin mining legislation. These are regions where the laws are friendly to miners or where the government recognizes the sector. Here’s our list of the best countries to mine Bitcoin.
Located in the Middle East, Kuwait is one of the most exciting countries to do business in the region. The cost of living is really low, thanks to the country’s oil revenues and ease of doing business. It’s worth noting that you’ll need to contend with generally hot weather. However, purchasing cooling systems won’t cost you much, so you should be able to offset the weather conveniently.
In this nation, mining Bitcoin could cost around $1,500 in total. Bitcoin isn’t legal in Kuwait, so you’ll most likely be mining and selling them off to traders in other countries.
The country might be hit with one of the worst levels of inflation, but Venezuela is a pro-crypto country. President Nicolas Maduro has made a mandate of using cryptocurrencies to circumvent economic sanctions imposed by the United States, and they’ve worked rather nicely so far.
When it comes to costs, you might not find a better country to mine Bitcoin than Venezuela. Bitcoin mining could go as low as $531 per token, as electricity costs about $1.9c/kWh. The country also has a 9 percent unemployment rate, so you should be able to get cheap labor if you operate a mining farm.
Moving on, you’ll find that mining is also a lucrative crypto-related activity in this Latin American nation. You might, however, run into some issues as Venezuela is known to have some protracted electricity outages.
Iceland is every cryptocurrency miner’s dream- the country has an abundance of cheap electricity, a cold climate, and favorable regulations. Over the past two years alone, crypto mining activity in the European island nation has almost doubled.
So, what do the facts say? Electricity in Iceland costs about $0.071/KWh, with prices this low due to the country’s impressive hydroelectricity network and geothermal plants. You also get an average temperature of between -1 °C and 12°C, meaning that air conditioning costs will be negligible. The government has also not placed any restrictions on mining here, so you get to operate freely.
The only problem that miners face in Iceland is the cost of labor. The unemployment rate is 3.5 percent, so you’ll need to shell out some big bucks to attract top talent.
China is known as the mining capital of the world, due to its prominence on the Bitcoin network. The country holds about 66 percent of the global hash rate, moving up from 60 percent back in June 2019. China also houses some of the biggest mining companies in the world (Bitmain, Canaan Creative, etc.) Estimates from CoinShares showed that the total revenues coming from mining in China could eclipse $5 billion in 2020.
In China, due to the affordable cost of power and the use of alternative power sources, miners can outlast their foreign competitors with ruthless efficiency. One alternate power source that is common in China is coal, which they have in excess. It’s not uncommon to find Bitcoin miners who set up their mining operation near a coal source, where they freely burn coal and use the energy to mine Bitcoin.
Nevertheless, the prominence of coal in China is also beginning to see a decline. Experts believe that by 2050, electricity generated from coal will decline to about 30 percent- with the rest coming from oil, natural gas, and renewable sources. It is expected that as more renewable energy sources come out, mining costs will reduce.
However, when it comes to mining in China, the Sichuan region is the cream of the crop. CoinShares estimates that the province alone accounts for 50 percent of global hash rate,
The United States
Setting up a mining business in the United States is just about the same thing as doing it in China. The U.S. might not have the same level of prominence when it comes to mining as China does, but you at least get the safety that comes from knowing your operation is safe.
Last year was a big one for the United States when it comes to mining, with several companies setting up shop in the country. Most pointed to an abundance of landmass, and you should also keep in mind that cryptocurrencies are prominent in the United States- ergo, the country is great when it’s time to sell the Bitcoins you mined.
Currently, the United States is ranked by Investopedia as the 41st cheapest country to mine cryptocurrency, with an average mining cost of $4,578 per token. However, as the news medium explained, this could also vary from state to state. There are a couple of reasons for this. They include the landmass available, the average weather, and the availability of hydropower and cost of electricity (which also varies between states).
Washington (the state- not D.C., mind you) leads the nation in hydroelectricity, with about 1,166 dams in the state alone. About 80 percent of the electricity generated in this state is renewable, and it was responsible for generating about one-eighth of the electricity generated from renewables nationwide in 2017. So, it’s no surprise that it’s the cheapest state to mine, with an average mining cost of $3,309 per token.
The government might not have laws concerning crypto mining just yet, but it’s obvious that the activity is there to stay.
Iran might be on the brink of an economic and a political crisis right now, but its crypto mining is still very strong. Concerning regulations, bitcoin mining is legal and the Iranian government officially recognizes it as an industrial activity.
Iran has also been a major flourishing ground for mining, as miners all over the world have moved in there partially because of the country’s cheap electricity rates. Households pay between $0.03 and $0.05 per kilowatt-hour in the Middle Eastern country.
These affordable rates along with the increase in miners migrating to Iran has seen the country’s energy demand jump by 7% in the past months. This pushed the government into creating a new price model for mining facilities and a new consumption threshold for miners. Notwithstanding, Iran is still one of the best countries to mine cryptocurrency.