Crypto mining refers to the process of creating cryptocurrencies and validating new transactions. It entails vast, decentralized networks of computers that verify and secure virtual ledgers called blockchains, which record crypto transactions. Computers on the network are rewarded with new digital coins in exchange for contributing processing power.
Present Day Crypto Mining; Where to Set-Up Shop
A decade ago, anyone with a decent home computer could become a crypto miner; however, blockchains have grown in popularity, and so has the computational power required to keep them running. For instance, it took 12 trillion times more computing power to mine one bitcoin (BTC) in October 2019 than when the first blocks were mined in January 2009. As a result, almost all mining is now done by specialized companies or groups of people pooling their resources.
However, the rapid expansion of crypto mining has raised concerns about the power required to keep operations running. These concerns have resulted in prohibiting crypto mining in many countries previously thought to be welcoming environments for the activity.
That being said, there are still some jurisdictions whose regulations are favourable for crypto miners. This article will provide an overview of some of the friendliest regulatory landscapes for crypto mining worldwide. So if you’re thinking about starting a mining operation, read on for helpful advice!
Norway: A Crypto Mining Haven?
Believe it or not, Norway is one of the friendliest regulatory landscapes for crypto mining operations. Why? It’s because the Norwegian government sees cryptocurrency and blockchain as a means of furthering the digital transformation of its economy, becoming one of the first countries in the world to do so.
Norway contributes nearly 1% of the global BTC hash rate. The country also has some of the best internet speeds for crypto mining, averaging about 88.8 Mbps. Norway also relies heavily on hydroelectric power for its energy supply, and electricity costs about $0.127 for businesses.
In terms of regulations, Norway has no bans or restrictions on cryptocurrency mining. However, there have been political and legislative discussions about whether cryptocurrency mining facilities should pay full electricity fees. Crypto mining facilities that consume more than 0.5 MW currently pay a lower electricity fee. However, due to the high electricity consumption associated with mining, the current energy crisis caused by Russia’s invasion of Ukraine, and the resulting climate footprint, it is unclear whether Norway will maintain the reduced electricity fees.
What Is the Regulatory Environment Like in Iceland?
Iceland is one of the friendliest countries in the world for crypto miners. The government has made it clear that they want to attract this industry and has put in place several measures to make it easy for miners to establish operations there.
For example, the government has introduced low electricity rates for crypto miners. They’ve also created a fast-track licensing process that allows miners to get up and running quickly. In addition, the Icelandic authorities have been very proactive in working with the local cryptocurrency community to ensure they understand the rules and regulations surrounding crypto mining.
Iceland’s cryptocurrency mining industry is unregulated. No licenses are required, and an Icelandic coin-mining operation receives no more scrutiny than any other type of activity.
The Icelandic Blockchain Foundation actively advocates on behalf of Iceland’s cryptocurrency miners.
Furthermore, electricity is relatively cheap in the country. Commercial electricity costs $0.138 per kWh and is generated entirely by hydroelectric dams and geothermal power plants.
As a result of these factors, the country has become a popular location for crypto mining, accounting for nearly 8% of all global Bitcoins mined.
Benefits of Establishing Cryptocurrency Mining Operations in El Salvador
El Salvador has the potential to establish itself as a prime destination for cryptocurrency miners, and with good reason. On June 9, 2021, the country passed the Bitcoin Law, which made BTC legal tender.
Under the new legislation, every merchant in the country is obligated to accept bitcoin as payment. Additionally, the cryptocurrency can be used to pay taxes and settle bank loans.
Salvadorian President Nayib Bukele has also endeavoured to make El Salvador a centre for zero-carbon bitcoin mining. The country is rich in clean, carbon-free geothermal energy. Nearly a quarter of the electricity is generated from volcanic heat, which requires no fossil fuels. Two-thirds of the country’s geothermal energy remains untapped, enough to power 3 to 4% of the global Bitcoin network.
On June 9, 2021, Bukele instructed the president of LaGeo, the state-owned geothermal energy company, to put up a plan to offer facilities for bitcoin mining with very cheap, 100% clean, and 100% renewable energy from the country’s volcanoes.
Energy costs are the single most significant expense for bitcoin miners; in El Salvador, miners could generate substantial revenue for the country and significantly lower the cost of electrifying rural areas.
Georgia Carving a Niche in Crypto Mining
Despite its small size and population, Georgia has become a popular location for cryptocurrency mining due to its low electricity costs, lack of legislative restrictions, and attractive tax incentives. This confluence of factors has piqued the interest of Georgians and foreigners interested in trying their hand at cryptocurrency mining.
Georgian authorities established a Free Economic Zone (FEZ) in Tbilisi, the country’s capital, in 2015 to attract foreign investment and boost the economy. This action proved beneficial to the crypto industry. By 2018, the country was ranked second in Bitcoin profitability. The relaxed regulatory environment drew foreign investors to the country, including Dutch bitcoin miner Bitfury.
Miners in Georgia are exempt from income tax on any profits from the sale of cryptocurrencies. The sale or exchange of cryptocurrencies for Georgia’s national currency or another currency is also exempt from the 18% VAT slapped on most products in the country.
All in all, when it comes to the friendliest regulatory landscapes for establishing crypto mining operations, it’s clear that there are a few stand-out countries. El Salvador, Iceland, Estonia, and Norway are all great options, each with its benefits.
So, if you’re looking to set up a mining operation, research each of these countries to see which would be the best fit for you.
In some of these nations, you might also employ mining hosts. Mining hosts are specialized facilities that charge cryptocurrency miners for access to rack space, electricity, and associated services like security, monitoring, and customer support. Such service providers can be found on dedicated websites like mininglisting.com.
Of course, you should always keep up with the most recent regulatory changes to ensure compliance.