Three Countries Where It’s Cheapest To Mine Cryptocurrencies
The crypto winter which lasted for pretty much the whole duration of 2018 and then some in 2019 is finally over. The survivors are now licking their wounds and preparing for yet another crypto market consolidation, hoping that the next time such a recession occurs they will be ready.
However, there are some companies out there, that didn’t lose pretty much anything during the crypto winter. Sure, they weren’t profiting as much from mining Bitcoin anymore, but they were somehow still staying afloat without having to lay off staff or cut costs.
Which countries managed to provide such an environment for these companies? What type of laws did they have and how much did it cost to run a Bitcoin mining right there?
There are exactly three countries that provided such opportunities for large mining groups. Let’s see their crypto mining policies just to get a feel as to how they managed to survive.
Although the government of Iran is starting to be a bit sketchy towards cryptocurrencies, their previous national policies of not touching crypto miners but banning crypto trading were working out more or less alright.
It was extremely profitable for the crypto miners themselves as they didn’t disturb the authorities and the authorities stayed away from them as well.
During 2018, mining one Bitcoin was around $3,700 including all of the costs on electricity and staff in Iran.
Therefore, crypto mining companies there managed to stay afloat without having to cut too many costs or seize their operations completely. But how?
Well, there used to be (and still are) very nifty subsidies on energy consumption in Iran. The country’s Ministry of Energy would pay more than half of the actual payment for the amount consumed so that the population would have at least some kind of benefits in terms of finances.
The crypto mining companies were inadvertently included in the “population” and they used these subsidies to their fullest potential.
Now though, it seems that the government is starting to face some financial issues after renewed tensions with the United States and therefore will have to cut back on too many subsidies. This means making the crypto miners either pay for their operations and energy consumed, or simply leave the country.
Unfortunately, Iran is leaning towards the latter option.
Georgia sometimes gets lost in the background of the crypto noise as it doesn’t really get featured a lot on the mainstream blockchain media.
However, the country is a leading cryptocurrency producer right behind the United States.
According to 2017 measurements, Georgia was mining around 15% of available Bitcoins at the time and was on third place behind the United States and China.
Since China is already very shaky towards crypto mining operations, there’s a high chance that Georgia could move to the second position and potentially become a crypto hub in the future.
According to a Georgian website about capital investments, many local businessmen have devoted a large chunk of their net worth towards establishing personal crypto mining farms. Some go for Ethereum, while others are contempt with Bitcoin.
However, none can match the computing power that Bitfury is able to field in this day and age. It’s the largest crypto miner in Georgia, and one of the largest crypto mining companies in the world.
There are multiple others as well such as birtvi which mostly does cloud mining.
In a sense, you get the point, the mining business is booming in Georgia and there are exactly three reasons as to why.
The first reason is that electricity is dirt cheap in the country. For example, mining one Bitcoin cost around $3,500 in Georgia when cryptos were at their lowest. There were some losses but not nearly as high as companies like Bitmain had to face.
The local labor force is also very cheap due to the small economy and inflation of the local currency. For example, paying a senior database engineer around $50,000 a year would be considered the 1% of the country’s population, not talking about junior positions.
The third reason is the revenue tax which is only 20% and the VAT of around 18%. Compared to major European states and the US it’s pretty much nothing. Furthermore, there are no taxes on crypto capital gain, therefore the miners can easily become institutional investors alongside large private traders.
Contrary to Iran, Georgia is planning to increase their blockchain space to a point where they can entice large crypto companies to come to the country and establish offices there, and many are starting to see the region as a profitable decision, especially those willing to do some mining in the future.
Although Venezuela is by far not the largest crypto mining country in the world, it has definitely been classified as the cheapest option one can find pretty much anywhere across the globe.
According to studies, the miners would have to pay around $550 for every mined Bitcoin and that was when BTC was worth around $12,000.
Even compared to a crypto friendly country like Georgia that is an extremely low cost.
This could be due to the country’s capabilities of maintaining very cheap prices on energy due to oil reserves and multiple other sources, but the numbers are varied.
When it comes to the salaries for the workers, they’re practically non-existent compared to the profits that the miners can manage.
One terrible flaw of Venezuela though is its government which has started to impose serious restrictions on local mining operations as well as trading different currencies. They did this in order to promote their own national cryptocurrency the Petro, which is backed by oil.
Needless to say, nobody was interested in using a cryptocurrency which is maintained by the government, who has already caused hyperinflation with the country’s fiat currency the Bolivar.
Regardless though, we’re here to discuss whether it’s cheap or not to mine Bitcoin in a specific country and Venezuela ranks the highest above them all.
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