Mining Bitcoins or other cryptocurrencies can be extremely lucrative, but setting up a full-scale mining operation usually requires specialized hardware that can be very expensive to both purchase and operate.
Most popular cryptocurrencies use a proof-of-work algorithm to mine new transaction blocks, which requires an immense amount of computing power in order to efficiently earn a profit; thus, the cost of electricity is one of the most important considerations when determining where to set up a mining project.
In addition to the energy required to run the computers, the energy required to cool them must also be considered; many miners choose to base their operations in northern regions because the colder weather allows them to save on cooling costs. Furthermore, the legal environment for cryptocurrencies varies widely between jurisdictions: some governments enforce tight regulations with these assets, while others don't even tax them.
If you're interested in cryptocurrency mining, consider the following countries, which we've selected due to their low electricity costs, favorable laws, and reputation among miners.
Iceland is among the most popular countries for cryptocurrency mining, due to its affordable electricity, cool temperatures, and permissive laws. A major mining company called Genesis Mining moved to the country in 2014, and many smaller operations have since followed it there; one report suggests that the country's electricity consumption approximately doubled during the cryptocurrency boom in 2017.
The typical cost to mine one Bitcoin in Iceland is about $4,750; while this is higher than most of the other areas listed here, the country's environment is favorable enough that many prominent miners prefer it nonetheless.
Due to its deeply subsidized electricity, Venezuela is likely the most affordable place in the world to mine Bitcoins; mining one typically costs about $500. Furthermore, the country's newest president has announced that cryptocurrency mining is entirely legal, removing any regulatory troubles for miners. However, despite its extremely permissive laws and low costs, few miners have moved to Venezuela due to its unsettled political and economic situation.
Estonia has the highest cost of mining on our list, with each Bitcoin costing $5,500 on average, but it is quickly becoming a hub for miners due to its extraordinarily friendly legal environment and high-quality internet infrastructure. Furthermore, the county's generous tax laws mean that the higher costs of mining are often offset by what the operation will save on taxes.
Canada offers relatively inexpensive electricity, especially in Quebec where hydroelectric power is very prominent, and the nation's cold climate means miners can save on cooling costs. Thus, mining here is more affordable here than many other places in North America; one Bitcoin usually costs about $4,000 to mine. Additionally, Canada’s government has worked to embrace blockchain innovations, and the country currently doesn’t regulate mining at all.
The United States
It's difficult to discuss mining in the U.S. as a whole, because different states vary widely in both their electric costs and regulatory environment. On average, mining a Bitcoin in the U.S. costs about the same as in Iceland, but it is considerably less in certain states; Louisiana is apparently the best state for miners, where they can usually mine a Bitcoin for about $3,250, and prices are also decent in Arkansas, Idaho, Tennessee, and Washington. While ICOs are the source of much regulatory debate in the U.S., mining is still largely unregulated, though certain areas – most notably New York – restrict mining due to the immense pressure it places on the electric grid.
Russia's government has certainly noticed that the blockchain industry has the potential to be a positive force for the economy, and they've worked hard to appeal to miners and startups. While the country has a relatively high cost of mining – one Bitcoin usually costs over $4,500 – it has a very friendly regulatory environment, and the government has even announced plans to subsidize electricity for miners using the power grid's leftover supply.