China is no longer the beating heart of Bitcoin mining: other regions, including Kazakhstan and the United States, now assume considerable weight.
China’s ban, the recent fight against mining farms, concerns about high energy consumption, and the resulting environmental impact are transforming the BTC production industry.
Another not insignificant detail should be added: after the halving of May 11, 2020, mining Bitcoin is increasingly complicated. For years now, the mining of coins can no longer be done “in-house” but is delegated to large companies, which need a lot of machinery, preferably cheap energy, and favorable taxation.
These aspects are determined for the choice of the region where it is appropriate to mine.
Bitcoin mining in Kazakhstan
After China’s ban, several mining farms have packed up and left Beijing, moving to Kazakhstan. Here, mining has its own legal framing.
As Forbes reports, it’s no coincidence that Bit Mining has already delivered over 320 Bitcoin mining machines to the country bordering China itself. What’s more, it plans to provide at least 2,600 more. Bit Mining itself is set to invest $35 million for a cryptocurrency mining data center in Kazakhstan. Another mining company that is winking at Kazakhstan is Canaan.
But why Kazakhstan? Because it has high energy availability at a distinctly low cost. Also favoring this choice is the cold climate that allows production systems to cool down sooner.
The state saw a massive opportunity in bitcoin mining. That is the reason leading to the introduction of taxation on the sector. It should be mentioned that there are no taxes on importing the equipment needed for mining. And that’s no small thing. But there is a tax, and it will come into force next year: it provides for the payment of 1 tenge (Kazakh currency, equivalent to 0.002 dollars/euro) for each kW/h of electricity consumed.
According to the government, there are 17 bitcoin mining companies active in the country. The tax serves not only to make a profit but also to prevent the creation of a kind of Wild West: Kazakhstan can not be just a land of conquest, and for this reason, the government wants a tax that primarily ensures its citizenship to have enough electricity for ordinary activities.
The alternative made in USA: Texas
But there is not only Kazakhstan. Bitcoin mining is also throbbing in the United States. There is one region that stands out more than others: Texas.
Here, in fact, the energy market is deregulated, in the sense that everyone is free to choose the most convenient supplier in a state where the cost of energy is already low by itself and where the production is also high. In short, there is plenty of energy.
That is also why some of the mining farms that are part of the Argo Blockchain have settled here.
Costs and sustainability
The main difference lies in two factors:
- Costs,
- Eco sustainability.
Kazakhstan at the moment seems to be even cheaper than the already affordable Texas. But while the United States is moving towards environmentally sustainable energy (and Bitcoin) production, Kazakhstan has the distinction of being one of the largest coal producers in the world. It’s easy to imagine where Kazakhstan’s bitcoins come from.
Indeed, according to a specialized report by IEA, only 1.4% of Kazakhstan’s energy supply comes from renewable energy (2018 data).
In contrast, Texas is working hard on renewable energy production by harnessing solar, wind, and hydro. Already in 2019, the production of clean energy constituted 20% of the total. If this percentage is destined to grow, and if it is true that Bitcoin production will have to convert towards eco-sustainability, then you can bet that Texas will be the hub of Bitcoin production.
The post The new Bitcoin mining frontiers: from Kazakhstan to Texas appeared first on The Cryptonomist.
