Regulatory Overview of Crypto Mining in Different Countries
Regulatory pressures continue to have an effect on the most popular countries to mine cryptocurrencies.
A move by the Iranian government to cut off the power supply to local Bitcoin (BTC) miners grabbed headlines in June amid a soaring price gain by the preeminent cryptocurrency. As Bitcoin surged to prices not seen since 2017, a rising hash rate mirrored renewed interest in the cryptocurrency. By July 1, the Bitcoin mining hash rate surpassed 69 quintillion hashes per second.
Nevertheless, the action by Iranian officials is a stark reminder that regulatory moves can still hold sway over the use of cryptocurrencies around the world. The Bitcoin mining space has marched on over the last two years through the depths of a humbling and harsh environment for the entire cryptocurrency space.
According to data from Blockchain.com, the Bitcoin mining hash rate has been on a steady increase over the last six months:
These are encouraging signs for the mining ecosystem despite pressures on a number of fronts. Price volatility and regulatory efforts have been notable obstacles. With this latest instance of regulatory pressure on cryptocurrency mining in Iran, Cointelegraph takes a deeper look at the major countries that have extensive cryptocurrency mining activity and the stances they have taken over the past few years toward the emerging industry.
China has had an intriguing relationship with cryptocurrencies over recent years. Its government has taken a hard line toward cryptocurrency trading, with financial institutions by banning Bitcoin trading, initial coin offerings (ICOs) and crypto exchanges.
Despite the status quo, China’s Bitcoin mining scene is a major player in the global hash rate, with China-based mining pools reportedly mining potentially 70% of all the coins created yearly. Furthermore, the global Bitcoin mining pools are dominated by Chinese ones. The reason for this dominance is largely due to the massive surplus of electricity in the country. This is most evident in the Sichuan province, which is considered to be the Bitcoin mining capital of China. It has been reported that this surplus of electricity has led to various power producers encouraging companies to set up mining operations in order to exploit untapped energy.
The dominance of China’s Bitcoin mining contingent could be disrupted if the regulations that were suggested back in April of 2019 come to fruition, with a government agency lobbying to ban crypto mining outright in the country.
It is a potentially damning blow for a country that is home to the likes of Bitmain, the producer of the world’s most popular ASIC miners. The company also has its own mining operations setup in the country.
Various reports in 2018 also suggested that many mining operators were looking for greener pastures overseas amid growing pressure from the Chinese government. It is understood that environmental concerns and a lack of tax revenue are driving factors of the apathy toward crypto mining in China.
Russia has a more lax approach to Bitcoin and cryptocurrencies in comparison with China — in that it still does not have a definitive regulatory stance on the space. Bitcoin is not regulated, but its use as a payment option for goods and services is illegal. This is set to change in the summer of 2019, as the Digital Financial Assets bill is expected to come into effect.
Up until this point, cryptocurrency mining has continued in the country, with the cold climate and cheap electricity as contributing factors. However, a report in June suggests that cryptocurrency mining operators could face fines in the future.
Anatoly Aksakov, the chairman of the State Duma Committee on Financial Markets, told local media outlet TASS that the cryptocurrencies created on open blockchains were considered illegitimate. At the same time, Aksakov stressed that it is not illegal to hold Bitcoin in Russia if the cryptocurrency has been bought or acquired outside of the country.
As Cointelegraph reported earlier this week, Iran’s government has taken a stern stance toward the crypto mining industry in the country due to a massive increase in electricity usage over the past month. The Iranian energy ministry believes that mining operations are to blame for an irregular 7% spike in electricity consumption amid fears of its grid is taking undue strain and intends to cut power to crypto mining operators until it has approved new energy tariffs.
Iranians currently benefit from government subsidies, which reportedly bridge the gap of how consumers are billed and what their actual electricity costs are. It is a situation that has provided a favorable environment for crypto miners. The mining ecosystem received a regulatory stamp of approval in September 2018 after a number of Iranian government departments officially accepted crypto mining as a legitimate industry in the country. This is expected to be ironed out by formal regulatory and legal frameworks.
Given the increase in mining activity and the profitability in Iran, the country’s deputy energy minister, Homayoun Haeri, suggested that the billing of mining operations should be the same as charges for power exports in