This year has been topsy-turvy for Bitcoin – but which one isn’t? Since December its value has dropped from $13,860 to $9,244, leading many part-time investors to pull funds from Coinbase and other popular wallets. This January Nobel prize-winning economist Robert Shiller told an audience at the World Economic Forum that while Bitcoin is a “really clever idea”, it will not be a “permanent feature” of the global financial makeup.
Thousands of Bitcoin miners disagree. By definition it has never been tougher to mine Bitcoin – in 2011 you could extract a hundred with your own home PC, while today entire factories toil for days for a few dozen – but mining hardware is increasingly wired to dig for more than one currency. And with the hundred richest Bitcoin addresses are worth over $19 billion, is it any wonder record numbers of miners are flocking to tech’s Wild West to pan for digital gold?
Ninety-six countries currently permit unrestricted use of Bitcoin: it represents 58% of the entire crypto market. As mining steps up, and the general public becomes increasingly aware of its advantages over centralized currencies, some nations are powering ahead in offering the best and cheapest environments for crypto speculators. Here are the top three.
Iceland is, by almost any nation’s standards, tiny: the windswept, northern archipelago is just larger than Indiana and home to so few people – 334,252 – that at each of the country’s matches at this year’s World Cup in Russia, up to 8% of Iceland’s population could be in the stadium.
But size isn’t everything. Iceland already has a tech scene punching far above its weight, with strong education and a robust system of tutelage, mentorship and venture capital. That skyrocketed after the 2008 financial crisis, which brought down Iceland’s leadership. Chilly air and cheap, geothermal makes it a Bitcoin miner’s heaven. Public mistrust of crypto is outstripped by mistrust of its own currency, the króna, whose volatility has catalyzed huge economic upheaval.
In 2014 Genesis Mining, one of the world’s premier extractors, moved from Germany to Iceland. Dozens of other companies have flocked to its volcanic shores in the past couple of years. So many miners have rocked up at Iceland’s major towns that one insider described to Red Herring tech workers sitting around in bars, waiting for their chance to mine.
Bitcoin will account for over 100 Megawatts by the end of 2018. Iceland’s government is already looking beyond the industry, eyeing artificial intelligence data centers as a substitute for the “fourth industrial revolution”, as economist Klaus Schwab has described the current movement. That may be some way off. Iceland’s Bitcoin dominance is anything but.
While South Korea is the most expensive place on earth in which to mine Bitcoin – one consumes as much as $26,170 – Venezuela is the cheapest, with a cost-per-coin of just $531. No wonder the South American nation’s beleaguered dictatorship is desperate to capitalize, while its precious oil revenues continue to plummet.
That’s not to say “cheapest” necessarily means “best”. And while Venezuelans may be able to extract Bitcoin at a fraction of their neighbors, high crime and illegality makes mining a risky business. Venezuelan President Nicolas Maduro threw his weight behind a crypto called “petro”, in an attempt to bypass US sanctions on his nation’s mineral wealth, before courts declared it illegal.
Bitcoin miners face similar laws. And that’s not to mention that, aided by a national currency, the bolivar, in free-fall, violent crime has catapulted and exposed Bitcoin miners can expect to have their equipment stolen, to be extorted or way, way worse.
But those rewards. “When it comes to utilities, Venezuelans are gifted in terms of price,” one miner recently wrote to a journalist at Hackernoon. “Electric power is cheaper than water, if I tell you how much a full house’s bill is, you wouldn’t believe me.”
Georgia, a stunning former Soviet state tucked between Russia, Turkey, Armenia and Azerbaijan in the southern Caucasus, has embraced cryptocurrency like few other nations. It is the first country on earth to implement a blockchain land registry, and recently partnered with mining firm BitFury, which has mined over 600,000 Bitcoins to date. The American company pays no tax on a massive warehouse in the capital city, Tbilisi, and enjoys a sweetheart deal on VAT.
Elsewhere, Georgia has a strong hacker scene, and minuscule electricity costs of around 8c/kWh. With a raft of hydroelectricity plants to come, that will continue to stay low and attract yet more miners to a country that, while small, is home to a vibrant culture, incredible landscape and a geographic location lodged right between Europe and Asia.