Due to the high power requirements of cryptocurrency mining, some cryptocurrency miners have caused power outages in some areas. There have even been reports of miners stealing electricity for mining as well. They do this to increase their profit since stealing electricity would mean a huge part of their cost is reduced. All of these negative actions have led to several countries changing their policies to regulate cryptocurrency mining, and some countries have actually made crypto mining illegal.
There are exceptions to this, with El Salvador making Bitcoin legal tender on June 9, 2021. It is the first country in the world to do so. The government even mines for Bitcoin themselves. As a result, their people can use the cryptocurrency for any transactions if the businesses accept it. However, The U.S. dollar continues to be El Salvador’s primary currency. This however, shows a change in the attitude towards cryptocurrencies, and a potential that they can have a future in commerce.
This acceptance of cryptocurrency is not possible in every country. Some countries, such as sub-Saharan Africa and China, have either banned cryptocurrencies or placed heavy regulations and policies on them. These regulations have actually impacted mining activities worldwide. For example, because China has banned cryptocurrency, many crypto miners have moved from China to Canada. This “migration” of mining has started to affect the power grid of Canada. However, Canada has not banned crypto miners. What Canada did instead was to regulate the industry and the asset is treated as a commodity.
Other countries have also taken similar measures. For example, in the past, because of the heavy regulation on electricity and other resources for crypto farms, many miners simply moved to countries in the third world with fewer regulations and set up their mining farms there. Some of those countries are beginning to take action because crypto mining activities take a significant toll on their power grids. For instance, in Venezuela, which interestingly also has a history of illegal mining for gold, the government seized more than 100 miners from an underground Bitcoin mining operation in 2021. According to local media, the authorities could track down the perpetrators because of the toll they were taking on the power grid, the National Electric System (NES).
Other countries around the world, such as Iran, have laws heavily regulating crypto mining. Kazakhstan, which saw an influx of crypto miners after China’s ban, is also mulling over introducing regulations to separate the crypto miners from other regular power grid users.
It is worthy to note that you cannot mine in countries where cryptocurrency is banned. For example, in South America, Bolivia and Ecuador are firmly in the “no to cryptocurrency mining” camp, not just because of the belief that cryptocurrency is a shadowy business, but also because of environmental concerns about mining.
In Africa, several countries are in the “no crypto” camp too. For the Nigerian government, for example, the claim is that cryptocurrency could destabilize the economy. The country’s power infrastructure has issues to begin with, with blackouts being a common thing. Mining causes a further strain on the power grid, which makes it a genuine concern.
Morocco has banned cryptocurrency trading since 2017 and its foreign exchange office informed nationals that transacting in virtual currencies was an “infringement” on Forex regulations. Recently, reports of increased illegal Bitcoin trading in Morocco have surfaced online. There have also been similar complaints about the effects of mining on the electricity grid. However, there is speculation that the government of Morocco may allow crypto trading under specific conditions soon.
Similarly, under the Islamic legislature of the country, cryptocurrency transactions, and by extension, mining are prohibited in Egypt. The Egyptian Islamic advisory Dar al-Ifta believes that cryptocurrencies might be harmful to the country’s national security and economic health.
In September 2017, Russia’s central bank said that it was totally against accepting cryptocurrencies as real money. As a result, market sites for Bitcoins and other cryptocurrencies were blocked in Russia. However, on January 1, 2021, cryptocurrencies were declared to be allowed in Russia, but they cannot be used as money in transactions for goods and services. Russians are allowed to mine, trade and hold cryptocurrencies.
From all of the above instances, it is obvious that the main concern that many countries have about cryptocurrency mining is the high carbon footprint that follows it. Whether or not it can be used as legal tender is secondary at the moment, because the immediate problem that cryptocurrencies pose is the high power consumption in mining for them. Thus, it is plausible that attitudes towards cryptocurrencies may change if mining is done using green power sources. This is something that several blockchain networks are looking into.
Regardless of what Bitcoin proponents may tell you, mining cryptocurrency is not a hobby of any sort. It is an expensive venture, but it can be profitable if you treat it like any other business. There is no guarantee that you will earn Bitcoin rewards even after spending considerable expenses and effort because you are competing against so many others out there, probably with better systems and hash rates. As illustrated with the example of the game with envelopes of cash, there can only be one winner for each envelope so you will need to beat the competition to mine cryptocurrencies.
Aggregating mining systems to combine computing power gives you a much better chance to mine Bitcoin or any other cryptocurrencies with higher difficulties. Given the considerable difficulty in the economics of mining Bitcoin, the activity is now dominated by large mining companies that have operations spanning multiple continents. However, by strategically channeling your efforts, you can make money from crypto mining.
