Publication date: 29 Jul 2021
Predicting the future of cryptocurrency mining is a complex occupation. It requires taking into account many indicators that can be relied upon when researching the prospects for mining.
The choice of a country for mining is influenced by a number of factors:
- legal restrictions and tax policies regarding mining;
- the availability of cheap electricity;
- climatic conditions – whether it’s necessary to organize a powerful cooling of the equipment.
For example, the Gulf countries have energy opportunities, but the hot climate complicates the process. The combination of factors makes Iceland almost perfect – the abundance of renewable clean electricity, the cool climate, the complete loyalty of the state. But here a new factor comes into play: it is a very expensive country to live in, so costs are rising significantly, which are not typical of global indicators.
However, Russia is an attractive country for full-scale mining.
The Russian Association of Cryptoindustry and Blockchain (RACIB) is preparing a project that will bring miners to the country with their equipment. Among the advantages of Russia are named: production of 1 PW of energy, very low population density, increasing percentage of wind energy, and the cold climate allows easy removal of heat from the stations.
RACIB is now actively negotiating with the authorities and state corporations to implement the project. Special teams have been formed, which include employees of the energy complex. The Rostov region, where the largest wind farm in Russia operates, has become a particularly promising location for crypto-farms.
- On the other hand, Deputy Chairman of the Central Bank Alexei Zabotkin said that the legalization of cryptocurrency in Russia as the means of payment threatens the financial security of the state. He also called cryptocurrency a digital surrogate of money and emphasized that the only means of payment in Russia, according to the law, is the ruble.
What is happening to mining around the world?
Until recently, China was home to about 70% of all bitcoin mining capacity, mostly due to cheap electricity. But in May 2021, the Chinese authorities announced an anti-mining policy, and as early as June, the People’s Bank of China prohibited the country’s banks from providing services for cryptocurrency accounts. As a result of these measures, miners began to leave the country and move production to other countries.
From the autumn of 2019 to April 2021, China’s participation in global crypto mining fell by almost 30%. During this entire period, according to the Cambridge Centre for Alternative Finance, Kazakhstan pursued a systematic policy to boost mining and increased its global share to 8.2%, up from 1.4% at the beginning of the period. In addition to Kazakhstan, the United States increased its capacity 3.5 times, taking the second place. Russia and Iran were ranked fourth and fifth.
For Kazakhstan, a new tax on mining, introduced by President Kassym-Jomart Tokayev in June 2021, could be a deterrent. Now the country’s authorities will charge a fee for mining cryptocurrency in the amount of 1 tenge for each kilowatt used. On the one hand, this could lead to negative consequences: migration of cryptocurrency farms to Uzbekistan. On the other hand, experts believe that this law is a positive signal from the authorities of the country. The state is ready to promote the development of the cryptocurrency market, because it is interested in income generation for the budget.
In any case, given all these factors, the situation may change greatly by the autumn.
Due to the increased popularity of cryptocurrency mining, the price of video cards in the last year has risen to a record and exceeded 2-3 times the recommended price. At the same time, due to the restrictions of the Chinese authorities on mining, the market was flooded with second-hand devices at a cost 3-4 times lower than the recommended one.
But scarce GeForce video cards of the latest 30-series because of the ultra-high demand began to be sold on tickets. The U.S. chain Best Buy (the largest consumer electronics retailer in the U.S. and Canada) offers to take a live queue and get a ticket from the store clerk. Only one video card can be purchased at a time, and it is forbidden to take the queue for another person.
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