Crypto miners need a lot of electricity for their mining activities. But with the high power consumption, several jurisdictions frown upon digital currency mining. In addition, mining activities recently create another environmental threat due to the source of energy.
Some miners use fossil fuels to generate the electricity needed for mining. The combustion of these fuels leads to the emission of carbon oxides which pollute the environment. Therefore, some governments have implemented strict measures on digital currency mining.
Bans on Crypto Mining
China’s ban on mining
In 2021, China launched a war against crypto mining, especially Bitcoin mining. The Chinese government first issued warnings about the mining and trading of digital assets in the country. Subsequently, the ban on crypto mining broke out in different provinces of China with the provinces of Xinjiang, Inner Mongolia, Sichuan, Beijing and Yunnan leading the way.
Prior to its crackdown on crypto mining, China was the largest digital mining country in the world.
Strict legislation in Kazakhstan
Leaving the Chinese shores, many miners found solace in Kazakhstan. At first, the government opened its doors to minors. Kazahkstan became the next crypto-mining friendly country and later the second largest BTC mining base in the world.
However, the miners’ joy was short-lived due to frequent power outages. The government of Kazahkstan has launched strict legislation to reduce the supply of electricity to crypto mining.
Lawmakers have dramatically pushed the once-low energy cost sky high, discouraging miners. In addition, the country has passed more hostile laws labeling all unregistered cryptocurrency mining activities an economic crime.
US Texas Freezes Network Connection Permissions
Although most miners moved to Kazakhstan during the Chinese crackdown, some simply chose the United States.
Low electricity costs in Texas have become an attractive point for miners. The country has provided the good infrastructural support that crypto miners need for their operations.
US energy sources are the most renewable and affordable for miners. Miners typically compete in a low-margin environment with electricity as the only variable cost. Thus, the lower the cost of energy, the better their profitability.
Unfortunately, the price of electricity is gradually increasing in the United States. Thus, the possibility of remaining profitable for miners in the United States decreases considerably.
Additionally, some miners who have migrated to the country are now having issues with permits to be able to connect to the network even with these increased tariffs. Thus, the United States seems to lose its position as the best destination for minors.
Miners looking for alternatives
As the difficulty of mining increases, miners are looking for other ways to create digital assets. And the crypto community may pay attention to post-Soviet countries like Armenia. This mountainous country seems to have good potential with its cheap electricity and government support.
In 2018, a free economic zone called ECOS was created by government decree. The idea was to encourage the expansion of the country’s blockchain industry and other technology sectors. Additionally, in August 2022, ECOS announced the addition of 60 MW of capacity to its power plant-based facility at affordable costs.
Featured image from Pexels, chart from TradingView.com