China has been a Bitcoin epicenter since the beginning. Sadly, its authorities aren’t fond of decentralization, so, they’ve been taking measures against the crypto-world through the years. Now, Bitcoin payments were banned, and it seems like they’re aiming to completely ban Bitcoin mining as well. That’s why a great Bitcoin mining exodus is bound to happen from China soon.
Since 2017, Initial Coin Offerings (ICOs) and cryptocurrency exchanges are banned in the territory. Just recently, the authorities in the provinces Inner Mongolia, Qinghai, Xinjiang, Yunnan, and Sichuan have been taking actions to ban or seriously limit the Bitcoin mining operations. Despite all the crypto-users living inside their borders, China’s government is suffocating this industry.
Until 2020, according to the Bitcoin Mining Map by Cambridge, this country accounted for 65% of the total BTC hashrate. That was probably because of the large amount of energy (necessary for crypto-mining) available at low prices. Likewise, the Internet speed is over 172 MB/s, and they can enjoy cold winters for cooling down the machines. The regulations have never been by their side, though.
So, if we talk about a massive Bitcoin mining exodus from China, some countries might attract the miners and their machines (or are already doing it). And due to several factors: availability and costs of energy, high Internet speeds, cold weather, and/or crypto-friendly regulations.
Probably don’t ring you any bell. This is a cold country located in Central Asia, with a smaller portion in Eastern Europe. It’s the world’s largest landlocked country, and the ninth-largest country in the world. It has the strongest economy in the region, and energy production (coal, oil, and gas) is its main source of income.
But more importantly for Chinese Bitcoin miners: it’s right next to China, and the electricity is very cheap at $0.052 per kWh for businesses. Plus, according to the International Energy Agency (IEA), Kazakhstan’s total energy production covers more than twice its energy demand. Another advantage is the building-friendly policies established by the government, which make it easy to build infrastructure (like mining farms) quickly. Some miners have shown interest already.
Of course, nothing is perfect. There are two main downsides. The first one has to do with the fact that Kazakhstan is a great producer of fossil fuels, and this won’t help to make Bitcoin any greener. The second one is that authorities are already preparing themselves for the miner exodus by applying new taxation rules to Bitcoin mining, starting in 2022.
This is not exactly a surprise. According to the same mining map by Cambridge, the second place worldwide in Bitcoin Mining is, indeed, the United States (Kazakhstan is the fourth, by the way). Plus, there are some states with high production of renewable energy and/or crypto-friendly regulations. Texas and Florida seem to be the favorite destinations for now.
However, Washington is the national leader in hydroelectric energy production, and Oregon has the highest use of renewables in the country. Amid their Bitcoin mining exodus, the miners from China might consider that.
Beyond these states, Maryland is already the destiny for over 3.3 tons of Bitcoin mining machines from China. This, despite its low energy production. By its part, Montana is the first national government to take a financial stake in a Bitcoin mining operation. But Texas and Florida aren’t the favorites for nothing.
As indicated by the U.S. Energy Information Administration (IEA), Texas produces more electricity than any other state, generating almost twice as much as Florida. And the latter is, by the way, the second-highest electricity-producing state. Their prices for business go between $0.015 per kWh to $0.096 per kWh. Additionally, both of them have crypto-friendly regulations.
This is another option closer to China, located in Southeast Asia. The manufacturing sector, including electronics, is the leading industry. Its economy is one of the most competitive in the continent, thanks to its oil and gas export. Of course, this means that fossil fuel is the primary source of electricity generation. They produce over 108% of their own usage, and the price for businesses is around $0.098 per kWh.
According to the mining map by Cambridge, Malaysia is the fifth country by Bitcoin mining percentage. Cryptocurrencies aren’t recognized as legal tender here, but they’re explicitly not illegal. Only the tokens considered securities and the cryptocurrency exchanges are regulated.
As for Bitcoin mining, it’s so common in there that millionaire electrical robberies have been made for this purpose. In February 2021, the police in the state of Johor arrested several suspects for stealing over $2.1 million in energy to mine bitcoins. The police seized over 1,746 BTC (around $59.3 million) as a result.
There was a time when Quebec, in specific, was a real paradise for bitcoin miners. This province is the largest producer of electricity in Canada, with its hydroelectric stations generating around 95% of such energy and an excess output for sale. That fact, along with the cold weather and the non-hostile cryptocurrency laws, brought a large number of miners to the province until 2018.
That’s when Hydro Quebec, the local energy provider, put a stop to the arrival of new crypto-miners. They reserved only 300 MW for the blockchain industry at $0.015 per kWh and established a selection process for mining companies. The request for proposals is now closed, but that might not be for good. Especially, considering this new Bitcoin mining exodus from China.
Alberta is another promising province for miners. The price is still cheap (around $0.082 per kWh), and the weather is still cold. There are no limitations for Bitcoin miners, but there’s, indeed, a downside. About 91% of electricity in Alberta is produced from fossil fuels, which won’t help to make Bitcoin any greener. Ontario would be a much better choice in that sense, and the prices are very similar.
Of course, we should mention that El Salvador (located in Central America) just adopted Bitcoin as legal tender. And more than that: LaGeo, the state energy company, is building new facilities specially bound to mine Bitcoin. They’re already digging a new well to provide around 95MW of clean geothermal energy (volcanoes).
Currently, El Salvador is generating more renewable energies than any other type. Every kWh for business is around $0.16, but there might be some accords in the future, given the Bitcoin-welcoming. According to the National Energy Commission, around 86% of the total energy production comes from renewables, including mainly hydroelectric and geothermal.
This sounds promising for the Bitcoin mining exodus, but it’s not the only promising country in the region.
Bitcoin mining exodus in South America
Venezuela is the only Latin American country included in the top 10 by Bitcoin mining, according to Cambridge. There’s a huge reason for this: the kWh for business is at 4,000 Venezuelan bolivars (maximum), which currently means around $0.0012. And this is only for 2021. Previously, the kWh was even cheaper. The country has one of the largest hydroelectric stations in the world, after all.
The problem with Venezuela is its current political and economical situation. According to a local expert, only 29% of the national electricity capacity is operational. This fact has produced over 11,000 blackouts in only one month. Not to mention that Bitcoin mining (and trading) is heavily taxed in the country, and the average Internet speed is the lowest in South America.
On the other hand, Brazil is one of the largest energy producers worldwide, including renewables. Mexico and Argentina could be options as well. The prices per kWh for business vary from $0.041 to $0.15 in these countries.
In any case, every miner will choose what’s better for them. A large number will stay in Asia, and even in China, if the authorities don’t apply an outright ban. Another large number will migrate overseas. How many of them? We’ll be able to tell only in the next few years, since building mining farms from the scratch isn’t that easy.
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