It has recently been proved that we are living in a time where digital gold rushes have become popular since the cryptocurrency bull run of 2022/2021. There is no doubt that investors, innovators, and entrepreneurs are loading up their covered wagons and en route west to stake their claims and mine bitcoins (after the Chinese ban, for more reasons than one), getting ready to cash in on this significant opportunity.
As opposed to the rush of 1849, the demand for crypto has not been driven by prospectors in a river but rather by favourable conditions for crypto mining. It’s important to understand that regulations, energy costs, sustainability, and infrastructure are just some of the factors that affect the viability of a Bitcoin mining hotspot and how they weigh in on whether it succeeds or fails.
What Is Bitcoin Mining?
The blockchain technology behind Bitcoin allows it to record and verify transactions using a distributed ledger and the proof-of-work consensus mechanism (PoW), which is somewhat archaic. As part of this process, application-specific integrated circuits (ASICS) are used by miners – those superfast, purpose-built machines that manipulate Bitcoin transactions and add them to the blockchain.
Using ASICs to solve complex mathematical problems through hashing this process is known as hashing. To hash entails an increasing amount of processing power, which means the advent of crypto miners. Think of a warehouse full of racks of computers. As is the case with traditional mining, this process is environmentally destructive and highly energy-intensive.
Bitcoin Hash Distribution Rates
Bitcoin’s hash rate is often handled by mining hubs that operate a more significant portion. China’s number of Bitcoins hashed in September 2019 represented more than 75% of the total Bitcoin hash rate. The reason for the bleed of crypto markets when China’s FUD rolls out inevitably is the loss of trust in crypto assets.
Despite this, the significant China FUD of 2021, where mining was banned in the PRC, became a blessing in disguise for BTC since mining companies were forced to relocate to countries with fewer restrictions on their activities. China was only mining 46% of Bitcoins in April 2021, and by December 2021, that number had fallen to 0%. Taking up the slack left by the PRC, the United States picked up the ball by the end of 2021. By that time, 35% of all Bitcoin hashes came from that country.
What are the factors that make a location suitable for mining cryptocurrency?
Mining is often attracted to specific locations for a variety of reasons.
These are:
- Prices of energy;
- A sustainable future;
- Infrastructural pre-existence;
- Policy stability, consistency, and favorability;
- Embrace the future and be able to innovate
- Energy Prices
There’s no question about it. There’s no question about how energy-intensive it is to mine bitcoins (and other cryptos). Because of these reasons, mining occurs in places where energy costs are the lowest, which means mining takes place there.
- Sustainability
Recent headlines have reported a lot of negativity about Bitcoin’s energy usage. The energy used to process Bitcoin in a single year may equal the energy used in the Czech Republic. There is no doubt in my mind that miners, who are looking to turn a profit without damaging the environment, have been made aware of this fact. Bitcoin miners, therefore, are often attracted to places where they can get clean, renewable energy resources and good infrastructure for the mining industry.
- Pre-Existing Infrastructure
Power supplies that are reliable for Bitcoin mining and ventilated spaces large enough to accommodate ASIC racks are required. The American Rust Belt offers plenty of available and affordable industrial space.
- Reasonable Government Policies
Investments are easier to make when there is political stability. The intelligent business person will be more inclined to invest in a place where the policies and outlooks regarding their industry are favourable. Are you looking to repair your credit fast but are unsure which the best credit repair company for you is? This guide has the answers.
- Willingness to Embrace Innovation
Innovators populate crypto ecosystems. Innovation thrives in places where change is welcomed. Mining enterprise growth often occurs in places open to trying out seemingly unlikely ideas, such as adopting Bitcoin as legal tender or generating energy from the mining’s waste heat.
China Bans Crypto
It’s almost the end of 2021, so I thought I would review the significant FUD surrounding China over the past year.
There are plans by the Communist Party of China in May and September of 2021 to halt cryptocurrency mining and use.
The policies of this government, whether they were intended to create the conditions for a future China-led Central Bank (which has been projected to be announced during the 2021 Winter Olympic Games- you’re not invited) or to maintain authoritarian control over its financial system, depriving it of innovation, capital, and foreign investment.
Although Bitcoin (and other altcoins) fell temporarily in value due to the move, for crypto enthusiasts outside of China, it has resulted in a positive economic and technological impact, which has resulted in growth and has encouraged venture capital.
There is no question that bitcoin’s environmental impact is a definite shortcoming of the technology, as everyone from Elon Musk to Liz Warren has named it once and again this year. During these difficult economic times, the world ought to be rejoicing that production is moving to places where pollution is less of a concern and where green energy is becoming a popular source of power (Cough, Bitcoin volcano)
Also read:What Are the World’s Top 10 Crypto Mining Hubs?
To avoid wading into this “minefield,” we have to disclaim a few things: Bitcoin mining changes constantly around the world, so if your city isn’t listed here, I’m aware you probably aren’t aware of it. So, if your city isn’t listed here, I know you probably aren’t aware either.
The fact that you know is also very important to us. Innovation is just as important to us as size. Hopefully, the bitcoin mining map for Cambridge will be updated again soon, so we’ll have more precise figures.
Let’s get started without further ado. Check out these mining hubs for crypto and bitcoin right now.
Texas, USA
The mining industry is big in Texas, too. Digital oil has been found in Texas. It’s a metaphor-filled world!
According to some data sets on hash rate distributions, the Lone Star State accounts for 14% of U.S. hash rates, but it is the top Bitcoin mining destination. Several Bitcoin miners are setting up shop in West Texas, such as the Chinese miner Bitdeer and the American business Riot Blockchain, which has purchased a 100-acre site in Rockdale, TX.
It is estimated that tens of thousands of ASICs are going to be delivered in huge quantities to the region, a technology that helps mint new bitcoins.
This is because Texas is a state that ticks most of the boxes on the list of desirable attributes for crypto mining.
- There are crypto-friendly regulations as well as a politically stable country;
- The Texas power grid is deregulated, and the electricity is priced in real-time, which isn’t ideal during blizzards.
- Energy stranded/flared in Texas includes stranded natural gas and renewable resources.
As a result of the state’s regulatory environment, mining in Texas is more predictable than in China. A telling example can be found in the increasingly numerous land deals and purchase agreements that the government is processing concerning crypto.
The flexible energy policies provide miners with the opportunity to connect directly to the power grid when necessary. You will also have access to cheap electricity at just 2.8 cents per kW-hour! The power you generate will come from renewable and sustainable sources.
It should be noted that many natural gas facilities in Texas use flaring technology that emits considerably fewer greenhouse gasses. Due to Texas’ deregulated electric grid, miners can also take advantage of spot pricing schemes, which allow them to stop buying electricity when prices are too high. The pace of development for Texas’ monetary production will increase to 13% of the total global output in the next few years if things continue as they are now.
USA, New York
Although New York State has high land and labour costs, it still manages 19.9% of the U.S. Bitcoin hashing power. New York has the nation’s largest crypto mining facility, illustrating its advantages. A former disused aluminium smelter in Massena has been converted into a successful mining operation operated by Coinmint and powered by a wind farm and dam on the Saint Lawrence River.
The crypto-mining potential of New York is similar to that of Texas:
- (At least at the moment!) New York has relatively friendly cryptocurrency policies;
- It’s not surprising that New York has a cold climate and several empty factory spaces that make it an ideal place to mine crypto;
- Renewable energy resources (although slightly more expensive).
The price of electricity in the Empire State is higher than in Texas; however, nearly a third of the electricity in this state is generated by renewable energy sources. For the same reason, New York seeks carbon neutrality by embracing nuclear power and uses more water to generate electricity than any other state east of the Rocky Mountains.
In the state of Wyoming, the regulatory environment is favourable toward crypto enterprises at the moment. It is, however, believed that the government is contemplating a three-year ban on crypto mining, during which the environment will first be assessed for the effects of the industry. Since most of the energy used is from renewable sources, this trend is unlikely to fruition.
The United States, Kentucky
One of the up-and-coming states in the crypto mining game is Kentucky. This state has historically been known for its coal mining. It is responsible for 18.7% of America’s total hash rate.
- As the current governor of Kentucky, he has been a friend to the mining industry, and a law granting exemptions to mining operations has been passed.
- In the region, renewable energy resources (hydroelectric dams and wind farms) are available as sources of energy.
- The region boasts a low cost of energy, a large number of human resources, and an abundance of idle industrial land.
Georgia, USA
Georgia’s mining industry dominates the U.S. mining industry, accounting for 17.3% of the country’s hash rate. Low energy prices and a favourable regulatory climate attract miners to the U.S. state of Georgia. Some members of the state’s government have even discussed letting citizens pay taxes in crypto.
Siberia, Russia
There are currently about 30,000 Bitcoin miners working in Russia, and it has absorbed some of the miners that China evacuated this year. The Russian Federation is now third in the world’s Bitcoin mining ranks, behind the United States and Kazakhstan.
This makes it ideal for mining cryptocurrencies as it is generally cold (especially in Siberia). Further, the Russian government is also mulling over ways to cash in on the mining industry’s incomes and taxes. A new law was proposed by the Duma (Russian legislature) last month, aimed at providing entrepreneur-friendliness to attract Bitcoin miners.
There is a certain amount of resistance, though, and the central bank has pushed back against the proposal and called for raising energy prices for the miners. Despite this, the overall outlook for Russia’s Bitcoin is quite bright, especially now that official crypto endorsements have been made by a significant player.
South Africa, Johannesburg
Crypto mining has become another industrial venture in Johannesburg, South Africa’s economic capital. Known for its gold rush heydays, business sectors, and access to Africa, the city has been called the place of gold. Joburg failing to meet the typical requirements for a crypto mining hub is quite interesting.
- South Africa suffers from frequent blackouts due to its notoriously unreliable power grid;
- The history of political unrest and labour disputes is well documented.
Its innovative approaches to crypto make it to the list despite this. Using solar power, Libertas mines 30 coins every day, making it one of the world’s most productive mines. Solar beams are plentiful in S.A., and this crypto enterprise is thriving off-the-grid and producing an impressive roadmap for other sun-soaked countries.
Vancouver, Canada
This beautiful coastal city made a list for Joburg’s same reason, its inclination toward innovation.
North Vancouver recently announced plans to become the nation’s first city to mine cryptocurrencies. By doing so, North Vancouver will kill several birds with one stone. As a result, energy costs are further reduced while the city’s economy is stimulated by converting heat generated by Bitcoins into electricity. In addition to combating climate change, it also produces heat energy while mining cryptos simultaneously.
As part of this partnership, the City of Toronto Energy Authority is partnering with MintGreen, a cleantech mining company, to develop “digital boilers” designed to recover as much as 96% of the electricity used in mining.
El Salvador
As of May of this year, El Salvador became the first country on earth to accept Bitcoin as legal tender, effectively stealing the P.R. award from Twitter’s Jack Dorsey and Elon Musk’s Doggfather (and fueling the markets yet again) when it announced that it would become the first country on earth to utilize a digital currency. Nayib Bukele, who has had a turbulent political career, announced several crypto-related projects during his controversial campaign.
A few of Bukele’s ambitions include giving every citizen $30 in Bitcoin and creating a volcano-powered city named “Bitcoin city” (remind yourself to take a look at how Akon City is doing). Several of Bukele’s projects are still in the early stages and stand an excellent chance of failing. Assuming he is successful in delivering on the promises he has made, El Salvador will become the world leader in the crypto sphere and will check numerous boxes on our checklist – where crypto mining can be done sustainably and geothermally, the favourable policy is in place, and everyone can adopt Bitcoin wallets.
Some critics of Bukele’s experiment warn that they fear the policy could have serious economic repercussions on the country’s economy, causing political instability in the region. Despite billing himself as “the world’s coolest dictator,” the 40-year-old, wearing a leather jacket-wearing a backward hat, has a democratically elected position where the official gets enthusiastic applause when Bitcoin’s price declines (in conjunction with Michael Saylor).
Conclusion
Based on this list, it is easy to say that New York is the most significant Bitcoin hub globally. Yet, they have learned from China’s examples that the political and regulatory environment can be oppressive, and New York’s environmental policies may come back to bite them in the end. Despite Texas not being the largest hash rate state, it seems to have set itself up to be the best place for the Bitcoin boom to take place. In every way, Texas is ideal for the Bitcoin boom.
In the modern gold rush that has taken place, consumers and the environment are the clear victors. Bitcoins started emigrating from China and migrated towards economically sustainable energy sources, which lends credibility to the currency. By protecting consumers and many Americans, Bitcoins have become more valuable. Canadians, Russians, and South Africans (as well as those from your country) will continue to make huge profits from Bitcoin.
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