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Crypto Miners Panic – No Reasonable Power Left?
Crypto miners require high electricity for their mining operations. But with the high energy consumption, several jurisdictions frown on digital currency mining. Moreover, mining recently creates another environmental threat due to its source of energy.
Some miners use fossil fuels to generate the necessary electricity for mining. Combustion of these fuels leads to emissions of carbon oxides that pollute the environment. Therefore, some governments have set strict measures for digital currency mining.
Ban on crypto mining
China’s ban on mining
In 2021, China started a war against crypto mining, especially Bitcoin mining. The Chinese government initially issued some warnings about the mining and trading of digital assets in the country. Subsequently, the ban on crypto mining broke out in various provinces in China with Xinjiang, Inner Mongolia, Sichuan, Beijing and Yunnan provinces taking the lead.
Before the crackdown on cryptomining, China stood as the world’s largest digital mining country.
Kazakhstan Tough legislation
As they left the shores of China, many of the miners found solace in Kazakhstan. At first, the government opened its doors to miners. 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 initiated tough legislation to reduce power supply from crypto mining.
Lawmakers dramatically pushed the once low energy costs to a very high level, discouraging miners. The country also passed more unfriendly laws that labeled all unregistered crypto mining as a financial crime.
US Texas freezes permits to connect to the grid
Although most of the miners moved to Kazahkstan during the Chinese attack, some chose only the United States.
The low electricity costs in Texas became an attractive point for the miners. The country provided the right infrastructural support that the crypto miners need for their operations.
The 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. Therefore, the cheaper the energy cost, the better the profitability.
Unfortunately, electricity rates are gradually increasing in the US. Thus, the possibility of remaining profitable for miners in the United States drops drastically.
Also, some miners who migrated to the country now have problems with permits to be able to connect to the grid even with the increased tariffs. So the US seems to be losing its position as the top destination for miners.
Miners looking for alternatives
As mining difficulty increases, miners are looking for more ways to create digital assets. And the crypto community can 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 established by government decree. The idea was to encourage the expansion of the country’s blockchain industry and other technology sectors. Also, in August 2022, ECOS reported adding 60 MW of capacity to its power plant-based facility at reasonable costs.
